February 15, 2014 00:00 By Sucheera Pinijparakarn
Lease-to-own instalment provider Singer Thailand has been stung by a rising number of non-performing loans, with most attributed to farmers who are suffering from long-delayed payments under the government's rice-pledging scheme.
The company’s managing director, Boonyong Tansakul, said farmers accounted for 25 per cent of its portfolio.
He said the overdue payments were not only pulling down the purchasing power of the agricultural segment, but were also affecting instalment payments.
He said NPLs at Singer had climbed from 5 to 6 per cent of total accounts at the end of last year.
But because of the prolonged political unrest and long-delayed payments under the rice-pledging scheme, the NPL level could increase.
Boonyong said the monthly instalment amount at Singer was low to help customers meet their payment schedule, adding that the company could repossess products to sell as second-hand to reduce inventory losses.
He said Singer was now more cautious about acquiring new customers, increasing the down payment from 8 to 10 per cent last month to help tackle NPLs.
The company had also increased the interest rate for hire purchases from 1.8 to 2 per cent per month to maintain its margin.
It would increase its focus on vendor customers instead of household customers to lower bad debt and boost the ratio of vendor customers to above 50 per cent.
At present, vendors make up 40 per cent of the company’s portfolio and the other 60 per cent are households. Boonyong said the company had 180,000 accounts, with outstanding loans of about Bt2 billion.
He believes the serious effect from the delayed payments to farmers will show in the next quarter.
Therefore, he said the company needed to implement measures to tackle the problem including the possibility of carefully selecting customers in the farming segment until the farmers receive their money from the government.
Singer reviewed its business plan monthly, with revising down its annual growth target this year from 20 per cent to 10-15 per cent.
Boonyong said revenue from instalments represented 90 per cent of total revenue.
He said the company would try to keep NPLs at no more than 7 per cent this year.