Auto lenders pin hopes on H2
Car loans are expected to continue their struggle in the first half as consumer confidence remains shaky, but lenders are holding out hope that state spending will help boost domestic consumption in the second half.
“We are waiting for the government’s economic stimulus package to ensure improvement in consumer confidence in the second half,” said Tisco Bank senior executive vice-president Sakchai Peechapat.
Car-loan demand has been weak from the beginning of the year, he said, in line with low sales volume for new vehicles and swelling household debt.
The bank expects marginal growth in car loans this year of 2-3%.
Lower oil prices are a positive factor easing petrol costs for car users and helping support monthly instalments for car loans.
Tisco Bank focuses on asset quality rather than loan expansion as a risk management strategy in times of fragile economic recovery.
The bank expects to maintain the level of non-performing loans (NPLs) in the business segment after it peaked last year.
As of December 2014, Tisco’s car-loan portfolio stood at 165 billion baht or 62.8% of total outstanding loans, down 9.6% from the previous year.
The bank’s NPLs rose to 2.57% of total debt outstanding, compared with 1.73% at the end of 2013.
“However, we don’t think we need stricter loan approval when demand has not improved, as the existing criteria are good enough to handle higher risk in the market,” Mr Sakchai said.
“Hopefully, auto loan demand will improve in the second half of the year when it is normally high season for consumption. Also, the government will implement an economic stimulus package to boost consumer sentiment and purchasing power.”
Thanachart Bank (TBank) executive vice-president Praphan Anupongongarch agreed that car-loan growth in the first quarter would fall in line with the market slowdown.
The bank remains focused on controlling bad debt, especially in consumer loans.
TBank, the country’s biggest auto lender, said outstanding car loans stood at 421 billion baht at the end of 2014, down 9.27% from the year before.
Auto hire-purchase loans are the bank’s core business, representing 55.7% of total outstanding loans of 755 billion baht.
According to Toyota Motor Thailand data, January car sales in Thailand fell by 12.8% year-on-year to 59,721 units.
The largest Japanese car maker expects overall domestic car sales to miss the fullyear projection of 920,000 units.
Tisco Bank and TBank will take part in the 36th Bangkok International Motor Show with several promotional campaigns, despite the fact that the Motor Show is not expected to boost car sales significantly in the current situation.
The pricing campaign will be a gimmick to attract car buyers at this year’s event, which opens to the public at Impact Muang Thong Thani on Wednesday.
TBank’s strategy is to concentrate on existing customers as a means to control asset quality.