Kasikorn Leasing Ltd (K Leasing)'s managing director, Isara Wongrung, said auto-loan growth this year would be less than in last year.

Aggregate car sales in June fell 12.4 per cent year on year, to 55,532 units, according to Toyota Motors (Thailand) Ltd, which compiles data for the industry. In the first half of this year, the industry sold 333,562 vehicles, compared to 345,897 in the same period in 2005.

K Leasing, however, said that despite the slump in auto sales, it would meet its car-loan target of Bt11.5 billion this year after extending loans worth Bt5.76 billion in the first half.

Given the recent sharp increase in energy prices, the company predicted that the Bank of Thailand would raise its 14-day repurchase rate twice in the second half of the year, by about 50 basis points on each occasion.

Based on this assumption, the company is preparing to raise its annual new-car loan rate to 3.6 per cent next month from the present 3.55 per cent.

Wisarn Booranasuntikoon, managing director of BT Leasing - a subsidiary of BankThai - echoed Irasa's said that the country's mounting risk factors, both political and economic, would also hurt the industry.

BT Leasing, established last year, plans to review its 2006 target to increase its outstanding car loans to Bt3 billion by the end of this year.

Tisco Bank announced yesterday that its new-car loans in the first half of the year totalled Bt6.34 billion, down 6.6 per cent year-on-year.

The bank's penetration rate in the first five months was 6.2 per cent, compared to 7.4 per cent in the corresponding period last year. Tisco, the country's second-largest car-loan maker, said it would start focusing on auto financing after playing down the business earlier in the year because of interest rate hikes. The company expects interest rates to peak soon, it said in a statement to the Stock Exchange of Thailand.

The rising interest rate has narrowed the interest margin generated by fixed-rate loans, including car loans.

The bank's consolidated loans and receivables were Bt65.19 billion at the end of the second quarter, a 2.3-per-cent quarter-on-quarter increase.

The bank posted a net profit of Bt351.2 million in the second quarter, down 12.2 per cent year-on-year. The drop can be ascribed to a 13.1-per-cent drop in net interest and dividend income as a result of higher interest expenses, the bank said.

Somruedi Banchongduang

 The Nation