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BBL banking on more direct sales staff to boost mortgage lending

Bangkok Bank (BBL) is gearing up to expand its housing lending in the Bangkok market by increasing the number of direct sales staff at the residential projects of leading property developers.

The thinking is that this approach can generally service potential home-buyers more quickly than if they go to one of the bank's branches.

Executive vice president Pochanee Kongkalai said last week that the housing-loan strategy for securing customers in the capital was unlike that needed upcountry, because the number of projects in Bangkok is much greater than in provincial locations, and branch staff might not therefore be able to take care of customers in a timely fashion.

BBL already has 200 direct sales staff, who work out of the residential projects of leading developers in and around Bangkok. It plans to add another 100 such staff to support its housing-loan expansion drive in the capital, she said.

The direct-sales strategy helps the bank to expand its mortgage lending at a much higher rate than the housing-loan industry as a whole.

In first half of the year, BBL's new housing lending grew by 13-14 per cent, while the industry witnessed flat growth.

Its net housing loans increased 6 per cent to Bt11 billion during the period, bringing outstanding mortgage lending to Bt184 billion from Bt173 billion as at the end of last year.

Pochanee said the current positive economic outlook would support housing lending over the remainder of the year, and this factor - coupled more direct sales at residential projects - meant the bank's outstanding lending at year-end was now expected to reach Bt200 billion, which would represent annual growth of 15 per cent.

BBL is, however, still likely to be less active in the nationwide housing-loan market than three major players in the sector - Siam Commercial Bank, Krung Thai Bank and Kasikornbank - she said.

Pochanee explained that the bank in the past had been well-known upcountry, due to its strong relationship with local property developers - pre-finance customers - which enabled it to follow up with post-finance business more easily due to the strong relationships it had developed.

The proportion of the bank's housing loans accounted for by the provincial market used to be above 60 per cent, but it is currently 50 per cent due to its stronger focus on Bangkok, she added.

Most of the mortgage applications in Bangkok are currently for condominiums rather than detached housing, as more customers are purchasing a condo as a second home due to the ease of transportation in the capital and surrounding areas, said the executive. This has driven the bank's proportion of condominium mortgages to 20 per cent of overall housing lending.

BBL also plays an advisory role for customers who might not qualify for a mortgage due an already high debt burden. For example, it might suggest that they look for a smaller, more affordable home, she said.

"In the case of customers that have such a high debt burden that they are unable to qualify for a mortgage, we will suggest that they focus first on reducing debt, which also sustains our approval rate and tackles the risk of rising non-performing loans," she added.


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