TBank shifts focus back to used cars

Thanachart Bank (TBank), Thailand’s largest automobile lender, plans to shift its focus back to the secondhand car loan market this year, having scaled back the business over the past few years.

The move follows signs of gradual improvement in used-car lending, chief executive Somjate Moosirilert said.

Used-car loans account for 30% of TBank’s total outstanding auto loans, which stand at 350 billion baht.

As the segment is considered a high-risk business, the bank will focus on the middle-income market to control asset quality, Mr Somjate said. The bank will also improve its credit-scoring system before fully embracing the business again.

The country’s sixth-largest lender by assets expects a higher rejection rate with the improved system but a marginal impact on the segment. The bank’s non-performing loans for the car hire-purchase business, however, are tipped to fall below 2% of auto loans by year-end from 2.3% at the end of 2015.

“The improved credit-scoring system will help the bank to better assess the risk of each loan applicant,” Mr Somjate said. “The debt-to-income ratio is the key indicator to decide who qualifies. We won’t relax certain conditions to let unqualified borrowers access our loans, as it would affect the bank’s asset quality and our clients’ credit record.”

TBank expects flat growth in outstanding car loans this year as new lending balances out loans paid off towards the end of the year.

Total lending has shrunk by up to 3 billion baht a month as the amount of new loans remains below that of retired loans.

Separately, TBank has signed an exclusive partnership deal with Chevrolet Sales Thailand to offer auto hirepurchase loans to Chevrolet car buyers.

The cooperation will support the bank’s auto loan growth, especially upcountry where Chevrolet pickup trucks and sport utility vehicles have strong sales. The two vehicle types account for most of Chevrolet’s sales in Thailand.