Wichit talks about the firm
Wichit talks about the firm

Summit Capital keeps loan focus on smaller-engine bikes

Corporate January 11, 2017 01:00

By SUCHEERA PINIJPARAKARN
THE NATION

DESPITE the continued growth of big-bike sales in Thailand, Summit Capital Leasing is focusing on expanding its lending for the purchase of smaller-engine motorcycles in order to achieve a healthier margin.



DESPITE the continued growth of big-bike sales in Thailand, Summit Capital Leasing is focusing on expanding its lending for the purchase of smaller-engine motorcycles in order to achieve a healthier margin.

 Sales of smaller bikes are seen as sufficiently high to support the goal of Summit Capital becoming the top lender in the segment next year, chief executive officer Wichit Phayuhanaveechai said yesterday.

 The company currently ranks second in the small-bike segment, while the current top player in the motorcycle-leasing market has expanded into the big-bike segment.

 Summit Capital wants to leverage its expertise in the more familiar area of traditional bikes, which generate a higher margin than big bikes, he said.

 The effective rate for normal bikes is 35 per cent-37 per cent per year, while the rate for big bikes is just 4 per cent, he added.

 By ticket size, big motorcycles naturally cost much more than other bikes, but the company wants to be the market leader in motorcycle lending in terms of units, he stressed.

 Summit Capital has aggressively catered to the traditional-bike market since 2014 and Wichit, who joined the company that year, is determined to lead the company to market leadership in the segment in 2018.

 The goal is to provide to 120,000-140,000 motorcycle loans next year, compared to around 80,000 in 2016, the CEO said.

 As to this year, the company targets 100,000 loans, with good economic momentum supporting the disposable income of its customer target, which is those with a monthly income of Bt10,000 or more.

 The number of newly registered motorcycles in Thailand is expected to remain in the region of 1.7 million to 1.8 million units a year, of which some 500,000 units will entail buyers looking for financing from leading leasing companies, Wichit said.

 Local leasing operators that are also motorcycle dealers are toning downing the finance they offer to buyers, leaving an opportunity for Summit Capital to grab market share from those players, Wichit said.

 The number of newly registered motorcycles last year grew by 3.4 per cent to 1.74 million units, which helped Summit Capital to expand its loan portfolio by 23.7 per cent to Bt5.4 billion.

 The company targets its outstanding loans expanding by a further 35 per cent to Bt7.4 billion this year, he said.

 To achieve the goal, the company will increase its number of branches to cover 84 per cent of the country, as well as increasing the number of dealers in its network. 

 It will also increase the number of payment channels available to borrowers, in order to better accommodate debt repayment.

 With the company seeking to accelerate loan growth, non-performing loans could rise a little, but it will control the NPL ratio at no more than 1.2 per cent this year, from 0.9 per cent at the end of last year, the chief executive said.

 Summit Capital has two loan products, with 95 per cent of its lending accounted for by motorcycle loans and the remainder coming from personal loans. 

 The company in the long run wants to see the loan proportion from bike loans at 40 per cent, and personal loans accounting for 30 per cent of its business. 

 The remaining 30 per cent will be from a new loan product, which will be unveiled by the end of this year, Wichit said.

 Meanwhile, the company is closely monitoring the effects of the current severe flooding in the South.

 If the floods persist for more than a month, it will impact the debt-repayment ability of customers in the area and the company is therefore increasing its provisioning to cope with an expected rise in delayed payments and defaults, he said.

 The company will also waive charges to flood-affected customers that are unable to repay debt by the due date.

 

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