CIMBT offers borrowers new product

CIMB Thai Bank (CIMBT) wants the launch of its low-rate personal loan product to attract 10,000 new borrowers and secure 500 million baht in lending this year to help it achieve its goal of 15 billion baht in outstanding personal loans.

The personal loan is called Extra Cash, and is targeted at upper-income customers earning a minimum monthly income of 30,000 baht, said executive vice-president Onanong Udomkantrong.

The bank charges borrowers an annual interest rate of 7.3% for the first year of Extra Cash and 14.6% for the remaining loan term, well below the central bank’s ceiling of 28% per year.

With a risk-based pricing approach under International Financial Reporting Standard 9 (IFRS9), the bank is allowed to offer the lower personal loan rate.

Risk-based pricing is a methodology adopted by lenders to determine interest rate charges based on the debt-servicing ability of borrowers. A borrower who lenders estimate is less likely to default will be offered a lower interest rate than those who have a higher possibility of failing to honour a debt.

The adoption of data analytics technology allows the bank to better offer credit lines and interest rate charges to meet customers’ requirements, she said.

CIMBT wants to target new upperincome customers and better control loan quality.

The bank’s new personal loan product arrives after the Bank of Thailand imposed tougher regulations on unsecured loans in September by restricting those earning under 30,000 baht a month to three personal loan creditors. The central bank’s move has forced personal loan lenders to shift their focus to those who earn monthly income above the 30,000-baht threshold.

CIMBT, a small bank largely owned by Malaysia’s CIMB, aims to raise its personal loan portfolio to 15 billion baht by the end of this year from 10 billion last year. Loan growth remains on track to reach the target.

The bank’s non-performing loan ratio has fallen to 2.8% from 3% at the end of 2017 and it wants to lower the ratio to 2.5% by the end of this year.

“New personal loan applicants with a minimum income of at least 30,000 baht represent around 80% of total applicants per month, up from 20% over the past few years,” she said.

CIMBT has been resilient amid the central bank’s stringent regulations governing credit card and personal loans, Ms Onanong said.

There are 10,000 personal loan applicants on average a month seeking credit of around 600-700 million baht, she said.

CIMBT shares closed yesterday on the Stock Exchange of Thailand at 1.03 baht, down three satang, in trade worth 1.15 million baht.