Leasing firms expect delays in debt repayment amid unrest

Economy January 22, 2014 00:00

By The Nation

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Leasing companies expect customers to start delaying debt repayments due to the continuing political unrest.

Kasikorn Leasing managing director Akaranant Thitasirivit yesterday said the prolonged political turbulence had affected the income of many hire-purchase customers, which apart from resulting in likely repayment delays, could mean new auto lending will be suspended, as well.

Consumers are, moreover, worried the political uncertainty will impact on their future income, therefore they may delay the decision to buy a new vehicle, which would in turn also affect hire-purchase business, he said.

While auto refinancing is a solution for car owners wanting to improve their liquidity, the economic slowdown might also increase risk in this segment, he added.

Sakchai Peechapat, senior executive vice president of Tisco Bank, said the economic slowdown would pull down incomes and dampen people’s debt-repayment ability.

The bank will, therefore, be more cautious about providing new loans.

Tisco is particularly concerned about the ability to repay among customers who took out auto financing during the first half of last year, when attractive promotion such as lower down payments with long instalment periods were being offered by auto-makers, he added.

Anuchart Deeprasert, chairman of the Thai Hire Purchase Association, said the level of repayment default could increase during the current quarter, due mainly to the political situation.

Tirachart Chiracharasporn, a senior vice president at Thanachart Bank, said the first quarter was the low season for auto lending and refinancing.

The bank has not seen any actual impact on its business from the anti-government demonstrations, he said.

The political unrest is widening the impact on small and medium-sized enterprises as well, according to Krung Thai Bank.

First senior executive vice president Weidt Nuchjalearn said the bank is concerned about rising non-performing loans in the SME segment this quarter, because of the Bangkok shutdown.

SMEs in the provinces have faced a slowdown in orders, causing some customers to request an extension to their repayment period, as they want to hold cash to prepare for any unexpected circumstances, he said.