Amid the slowing economy and continuing political unrest, personal-loan providers have become more selective in launching promotions because the high returns cannot outweigh the impact of non-performing loans.
Araya Phuphanich, the first executive vice president in charge of the credit cards and personal loans business at Siam Commercial Bank, said last week that the bank had slowed down offering promotions of personal loans to new customers but instead is still offering credit lines to existing customers who show good discipline.
SCB cut back on promotions after personal-loan borrowers showed signs of becoming delinquent, especially white-collar workers with a monthly income under Bt20,000 and small business owners with a monthly income of less than Bt50,000.
Demand for consumer loans remains strong because of the economic uncertainty. Unsecured loans can help the cash flow of some people. However, lenders should increase their awareness in screening customers and offering promotions.
SCB is marketing a special promotion for personal loans based on the objective, such as for a Lasik operation at a hospital. The bank will transfer the borrowed money directly to the hospital to avoid misuse of the personal loan. The bank will seek partners such as hospitals and building material stores to offer special campaigns for existing borrowers who want money for a real purpose.
SCB is targeting new personal loans at Bt10 billion this year, down from Bt20 billion in the past two years. Chatchai Payuhanaveechai, an executive vice president of Kasikornbank, said lenders can offer attractive promotions if they can handle risks because this kind of loan generates high yields.
KBank does not use special promotions like a lucky draw but offers premium products to all customers who recommend friends to use K-Express cash. “They all can get premium products. We think this campaign can attract more customers than by offering a few prizes for some customers,” he said.
The bank is also changing borrowers’ mindsets on using personal loans as a reserve for emergencies, not for creating a debt burden.
People will become more careful about spending and lenders will tighten loan approvals, so the personal-loan market might grow by 14-15 per cent this year instead of 20 per cent like last year.
KBank targets its own personal-loan portfolio to swell by 30 per cent to Bt20 billion this year, down from 50 per cent last year. Sudaporn Janwatanagool, executive vice president for the personal loans business at Krungthai Card, said the company has not changed its promotions for both new and existing customers.
New customers will be offered a credit line of three times their monthly income and existing customers will get a credit line extension.
On the occasion of its ninth anniversary, KTC has introduced the Big Thanks campaign with 500 prizes worth Bt2.19 million.
The grand prize is a ready-to-move-in studio condominium worth Bt1.34 million. KTC has seen lower NPLs from personal loans because it targets white-collar workers with monthly incomes starting at Bt10,000 and most customers are referrals from Krungthai Bank, which helps screen customers for KTC.