Nava Leasing takes up debt management

Debt management is expected to contribute half of its revenue in the next three years.

Meanwhile, the company's bad debts have fallen from 8 per cent to 3 per cent.

While some leasing firms have started raising their rates, Nava Leasing will not do so at the moment, because the company has opted to manage costs instead.

Managing director Ratanachai Nantapramote said his company had halted its new-car hire-purchase operations. Instead, it will focus only on old-car refinancing for people who need liquidity. There are few competitors in this market, while the company receives a higher margin in this business compared with new-car leasing.

"In this market [old-car refinancing], we can charge interest of up to 15 per cent, while the company can charge only 8 per cent for new-car leasing," said Ratanachai.

He said the company's strong point was its brand, which has been established for 16 years. Nava Leasing is well known for creating business alliances with local leasing firms. At present, there are 189 local alliances nationwide, and that number is expected to reach 200 this month.

"In conducting the leasing business, we won't open a lot of branches, because there is not enough capital," Ratanachai said. "Besides, the gains would not cover the costs. The only way for us is to create agents to whom we'll give 10-per-cent commission."

However, competition is getting intense in the leasing business. Nava Leasing has chosen to survive by expanding its alliances and entering the field of debt-management services.

Its Blessing Asset Service subsidiary has functioned as an asset-management company for a year now, resulting in the firm's non-performing loans to drop to 3 per cent, from 8 per cent about a year ago. From this month, Blessing Asset Service will serve other financial institutions, such as Siam City Bank and Thanachart Bank.

Ratanachai said his competitors might need at least two years to catch up, because Nava Leasing had been expanding its business over the past year. However, once there are more competitors, then that will be the right time for Blessing Asset Service to convert rivals into alliances by serving those leasing competitors with debt management.

While some leasing companies will increase interest rates, Nava Leasing cannot follow suit for fear of losing customers. It has saved on costs by no longer hiring salesmen, using agents instead.