CHA-AM : Thanachart Bank, Thailand's sixth-largest lender by assets, will focus on high-yielding financial products to improve profitability.
The bank is also counting on increasing demand in this segment once the economy regains momentum next year, chief executive Somjate Moosirilert said at a briefing in the resort town over the weekend.
Auto loans, particularly for used cars and auto debt refinancing, as well as small and medium-sized enterprise (SME) loans are among the high-margin loans.
The bank's yields on auto loans are in the range of 8-10%, while those on SME loans are 1-2% on top of the minimum lending rate (MLR), which currently stands at 7.375%.
Its net interest margin (NIM) for the first six months of this year stood at 2.53%.
Retail banking businesses including auto, mortgage, credit cards and personal loans accounted for 65% of the bank's total credit at the end of June, while corporate and SME loans made up the rest. Auto hire-purchase loans are the bank's core business accounting for 54.76% of its outstanding credit of 789.23 billion baht.
The market for both new and used cars has been distorted by the government's tax rebate for first-time car buyers, the impact of which is wearing off after the programme lapsed at the end of last year. However, the situation is getting back to normal.
"As the country's vehicle industry returns to normal, auto loans are a high potential growth area. We will expand new-car loans in line with the industry, and focus more on the high-yielding segments such as used cars and auto debt refinance or our Cash for Car scheme," he said.
New-car sales are estimated to resume normal growth at around 900,000 to 1 million units next year, based on the assumption that Thailand's economic growth for 2014 will be 4.5-5%.
TBank has set its 2014 loan growth at 8.5-10%. It has restructured its SME business in preparation for business growth next year.
Infrastructure and human resource development are the bank's other priorities next year as they could help improve the bank's service quality, speed up services and boost customer satisfaction.
It has developed a core banking system including loan approval and debt collection, a process it expects to complete in the second quarter of next year.
The development will help improve the bank's asset quality.
It aims to lower its non-performing loans to below the existing level of 4% by the end of next year, Mr Somjate said.