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Singer Thailand hopes farmers' rice payments will drive down NPLs

Lease-to-own instalment provider Singer Thailand hopes its non-performing loans will gradually improve next quarter after farmers finally receive money they are owed under the rice-pledging scheme.

The NPLs at Singer Thailand have risen since the end of last year because farmers, who account for 25 per cent of the business' 180,000 total borrowers, have suffered from delayed payments under the rice-subsidy programme.

Managing director Boonyong Tansakul said yesterday that the company hoped the NPLs would decline to below 6 per cent this year from 6.5 per cent currently after farmers receive money from the rice pledging, adding that domestic consumption would return to the positive in the second half of this year onwards.

He said the company would not change its lease-to-own conditions and revenue-growth forecast for the year until seeing signs of an economic recovery.

"We have given importance to the margin more than loan growth to carry the bottom line," he said.

"In the first quarter we achieved a net profit of Bt102.78 million and we expect the net profit in the second quarter will not be lower than that."

The company has tightened lease-to-own conditions to new borrowers by increasing the down payment to 10 per cent from 8 per cent to control risk.

Even though the higher down payment will affect loan growth, the company's margin so far this year has improved to 55 per cent from 50 per cent last year, Boonyong said.

Singer Thailand will grant loans through its subsidiary Singer Leasing, which currently has outstanding loans of Bt3 billion.

He said that the company had targeted 5,000 new borrowers this year, down from 10,000 last year, to control risk.

Around 70 per cent of the new customers were hire-purchase customers and 30 per cent were cash customers.

Boonyong said Singer's No 1 new customers this year would be vendors, following the new direction of Singer to expand its commercial products to small-business operators under the Singer Get Rich brand.

The company recently negotiated with banks to move to longer-term loans in the effort to manage cash flows. A major source of the company's funds is bank credit lines.

Singer Thailand will use debt repayments from customers as funds, with monthly repayments standing at Bt300 million.

It has no plan to issue an additional debenture after allowing Singer Leasing to issue one worth Bt320 million.


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