BAY lowers loan growth target

Bank of Ayudhya (BAY) expects loan growth this year to be lower than last year.

The bank is targeting 8-per-cent lending growth by focusing on the retail market in a bid to increase the percentage of loan mix this year to 44 per cent from 42 per cent last year.
Mark Arnold, president and chief executive officer, said yesterday that the bank's target of 8-per-cent loan growth in 2011 was based on the assumption of growth in gross domestic product of 4.5 per cent. In 2011, lending saw 11-per-cent growth, surpassing its target of 8 per cent.
He said the targeted loan growth for 2011 was higher than the GDP growth mainly because of the portfolio balance between the current account, savings accounts (CASA) and the loan portfolio.
Deposit growth in 2010 grew 11 per cent to 576.48 billion.
BAY was the last of the major banks to announce its results for 2010. The bank reported consolidated net profit of Bt8.8 billion, a 32-per-cent jump from Bt6.6 billion in 2009, due mainly to loan growth in all segments, particularly auto hire purchase.
The balanced portfolio came after the bank integrated all products under the Krungsri brand and One Krungsri, which helped accelerate growth in 2010.
Arnold said BAY aimed to boost the loan percentage of all segments, with CASA expected to increase to 45 per cent from 40 per cent, while the loan mix would rise to 44 per cent from 42 per cent.
He said the bank had aggressively captured deposits since late last year by launching new products and special campaigns.

MORTGAGES DECLINE
The bank will try to boost lending to all segments in its loan portfolio in 2011. BAY will try to increase the ratio of corporate and SME (small and medium-sized enterprises) lending to balance its loan portfolio. It expects its mortgages will decline because of the hike in interest rate and concerns over inflation.
Arnold said BAY's net interest margin (NIM) of 5.07 per cent was the highest figure among local banks. Because of furious competition in the banking sector to boost loan growth, the bank expects NIM to decline to 4.75 per cent. He said that was still higher than other major banks', and as a result BAY could have a selective focus on the loan mix, such as corporate and SME loans.
The yield on corporate loans is 3-4 per cent, SME yield is 6-7 per cent, while that for personal loans is 19-21 per cent and auto hire-purchase yield is between 7.5 and 12.5 per cent. The yield on new cars is higher than for used cars, so the range of yield of auto hire purchase has widened.
BAY believes that personal loans, credit cards and hire purchase will continue to grow in line with the market.
It will also focus more on lending for new cars to balance the portfolio and maintain relationships with clients. Currently the loan volume for used cars is higher than for new vehicles, but the value is lower.
The volume proportion of used cars and refinancing are 50 per cent, and new-car financing is 50 per cent.
Auto hire purchase is in the retail portfolio. In 2010, retail loans amounted to Bt207 billion of which 45 per cent - Bt120 billion - were for auto hire purchase, mortgages were 30 per cent or Bt80 billion, and personal loans and credit cards were 25 per cent or Bt70 billion.
Arnold said the bank was still looking to acquire more assets and related businesses to strengthen its current portfolio after it had completely integrated assets from the acquisition of GE Money Thailand in 2009.
It aims to rank among the top three in the banking industry with the highest return on equity by 2013. Its ROE now stands at 9.2 per cent.
ARNOLD: Bank still looking to acquire more assets and related
businesses.