THE VALUE OF non-bank personal loans is expected to grow by only 3-5 per cent this year, since all non-bank lenders are keen on preserving asset quality with more stringent credit criteria.
“The economy has not yet brightened and purchasing power has been in contraction. People are afraid of spending as their incomes are lower,” said Sudaporn Janwatanagool, executive vice president at Krungthai Card.
Non-bank institutions are screening loan applicants with no relaxation for risky customers showing bad instalment records, said Nayanee Peaugkham, managing director of Ayudhya Capital Services.
Sudaporn forecasts the firm’s second-quarter personal loans to rise faster than the first quarter’s 17 per cent thanks to high-season and back-to-school spending.
Krungthai Card aims for its personal loans to expand at least 15 per cent to Bt25 billion with 160,000 new customers this year.
“This year, the firm continues to grow and anticipates growing more than its target, possibly to 16 per cent on expansion of new customers to [strongly] growing tourism and hotel groups,” she said.
Krungthai Card’s non-performing-loan (NPL) ratio for its personal loans is targeted at 0.9-1 per cent this year. The first-quarter ratio was 0.9 per cent, thanks to intensified customer screening and debt collection.
That compares well with 4.1 per cent for banks and 2.3 per cent for non-banks.
“We continue to keep our NPLs at this level and our customers’ personal loan portfolios remain normal as our customers have spending discipline.
“We have not encouraged our customers to overspend. Moreover, the economy is still in slowdown,” she said.
Nayanee said Ayudhya Capital Services’ new personal loans through Krungsri First Choice and Krungsri First Choice Visa cards rose 5 per cent year on year to Bt11.9 billion in the first quarter of this year.
Ayudhya Capital Services, a subsidiary of Bank of Ayudhya providing credit-card and personal loans, expects its new-loan growth at 10 per cent to Bt54.5 billion for the whole year.
During the second quarter, a high season for spending, Nayanee expects more loan expansion from the previous quarter, predicting a 5-per-cent rise year on year in cash advances.
Regarding NPLs for personal loans, Nayanee said the whole system’s figure is projected to be steady because of strict conditions for loan extension and credit analysis.
Despite Thailand’s high level of household debts, personal loans account for less than 10 per cent of these.
In the first quarter of this year, Ayudhya Capital Services’ NPL ratio for retail customers remained steady at 3.3 per cent and the current figure is 3 per cent, given its more stringent customer screening.
Nayanee believes the NPL figure will stay at this level for the whole of 2017.
Amid the less-than-full economic recovery, all firms are taking the same direction for campaigns. They are not enticing people to spend unnecessarily or take on new borrowing, but are aiming at those who need money and have good credit to help relieve the debt burden.
Praphan Rangsiyopas, vice president for marketing at Aeon Thana Sinsap (Thailand), said the back-to-school and pre-Songkran periods had been seasons for spending with spurts in personal loans every year.
Given the firm’s intention not to encourage people to borrow more amid the Thai economic recovery, its personal loans may not expand much this year, he said.
Aeon Thana Sinsap (Thailand) remains strict with its credit conditions, he said, conceding that Thailand’s household debt remains high and more Thais have been blacklisted by the Credit Bureau.
Kittiphong Kanokwilairat, director for sales and marketing at Singer Thailand, said the firm was interested in the personal-loan business – nanofinance or picofinance – because of demand for money from grass-roots people.
Such loans could help relieve their spending at some level, he said, but such credit must be extended to fit their repayment capabilities and debt-collection periods.
“Now, the company is studying such loan extensions. We take the view that the important thing is to prepare a certain debt-collection process.
“Daily debt collection may be required to be in line with borrowers’ debt burden and repayment capabilities,” he said.