Tisco Bank's loan grew 9% in Q1

The bank will issue Bt2 billion of 10year subordinated debentures for retail customers from May 1122 in order to manage its assets and liabilities.

Pliu Mangkornkanok, chief executive officer of Tisco Group, yesterday said the group had made a net profit of Bt458 million in the first quarter, a yearonyear rise of 6.7 per cent.

The growth in lending by Tisco Bank was partly due to the additional hirepurchase portfolio of Primus Leasing, which was taken over by the bank, he said.

"Many people wonder why bank loans are still growing amidst the auto sales slump of 30 per cent in the first three months of the year. It's because the supply of hirepurchase loans in the market had shrunk a lot in the past few years and many big players - both financial institutions and leasing firms - stopped engaging in the business. So, about Bt100 billion of lending disappeared, and the bank has taken some of this portion," said Pliu.

Tisco Bank was able to increase its market share in hire purchase to 13.4 per cent in the first quarter, from 10.1 per cent in the same period last year. It extended Bt9.3 billion in hirepurchase loans in the period, up 8.9 per cent year on year.

The bank's total loan portfolio amounts to Bt107 billion, of which 75 per cent is for hire purchase and 20.8 per cent is business loans.

Oranuch Apisaksirikul, president of Tisco Financial Group, said that because the bank was able to manage its costs efficiently, its spread had risen to 4.2 per cent from 3.5 per cent at the end of last year. Its costtoincome ratio stands at 57 per cent, relatively low compared to the 60 per centplus of other banks.

Meanwhile, Suthas Ruangmanamongkol, president of Tisco Bank, said the bank was issuing the 10year subordinated debentures, as interest rates were currently very low, making it the right time to lock in the bank's costs.

"The minimum investment is Bt100,000 with an average return at 5.5 per cent per annum. If the bank can sell Bt1 billion, its capitaladequacy ratio will rise to 13.4 per cent. If Bt2 billion of bonds are sold, the ratio will be 14.4 per cent - against the current 12.54 per cent.

According to a market survey, currently the bank will be able to sell Bt1 billion," said Suthas.

Oranuch added that the bank was not aiming to increase its liquidity via the issue, and the main purpose was to manage assets and liabilities as the bank would like to see a duration gap of less than one year. The current duration on the asset side is longer than that on the liability side, she said.