Although the political tension has eased following the end of the "Bangkok shutdown" by anti-government protesters, consumer sentiment remains gloomy, which means that demand for personal loans has yet to return to pre-turmoil levels.
Adisorn Sermchaiwong, senior executive vice president of CIMB Thai Bank, yesterday said the bank needed to enhance overall spending sentiment by launching attractive promotions for its personal loans, which fell below target during the first two months of the year when the protests were at their peak.
In January, CIMB’s new personal lending came in at between Bt300 million and Bt400 million – well below the Bt700 million in new loan bookings in December – while new lending last month was stable at Bt400 million.
He said the bank acknowledged that amid the prevailing uncertainty, and with consumers continuing to worry about their debt, the bank had designed promotional programmes for personal loans by focusing on helping to reduce the debt burden for mid- to upper-segment customers with a good record of financial discipline.
Onanong Udomkantong, executive vice president of CIMB Thai Bank, added that the new personal-loan target of Bt10 billion for this year could be missed due to lower spending by retail – individual – customers.
In its special loan programmes, the bank aims to attract new customers with credit-card debt by charging an annual interest rate of 18 per cent for an instalment repayment period of 12-36 months, which is 2 percentage points lower than the 20-per-cent interest charged by credit-card lenders.
Moreover, customers borrowing Bt300,000 can also benefit from CIMB Thai’s programme, she said, while the special interest-rate reduction would be an attractive feature for good-discipline borrowers.
Half of credit cardholders in Thailand use revolving credit, and many of them may want to cut their debt by refinancing with other banks such as CIMB Thai that offer lower rates, said the executive.
The bank hopes to bring in Bt3 billion to Bt4 billion in additional lending from the new promotions.
Meanwhile, Kasikornbank (KBank) executive vice president Patchara Samalapa said that even though the Bangkok shutdown was now over, consumer purchasing power was only back to 50 per cent of the pre-protest level as people were still tightening their belts.
This has in turn negatively affected the recovery prospects of many small and medium-sized businesses, especially those in the tourism sector, he said.
KBank’s SME customers affected by the political unrest, and by the knock-on effects of delayed rice-pledging payments to farmers, have a total credit line of Bt3.4 billion.
He said the bank’s SME division was now considering lowering its 2014 loan-growth target from 9-11per cent, due to slower-than-expected demand for new loans and the potential for higher non-performing loans (NPLs).
Without the government’s Bt2-trillion infrastructure budget, loan demand from SMEs in the construction sector is expected to fall, he said.
When new loans cannot expand, the proportion of NPLs to outstanding lending will increase, Patchara explained, adding that it was therefore challenging for KBank to control its NPLs within the targeted range of 2.85-2.89 per cent.
The executive also said it was possible that KBank would fall short of this year’s targeted income growth of 14 per cent.