Bangkok Commercial Asset Management (BAM) is considering purchasing more retail bad debt in the forms of personal and auto loans from financial institutions to expand its types of assets from mortgages and credit card debt.
A leaflet advertising personal loans at a bus stop. Years of low interest rates have spurred growth in personal and household loans, some of which have turned sour. PATTANAPONG HIRUNARD
Senior executive vice-president Sak Srisanan said rising non-performing loans (NPLs) in the banking consumer finance segment provided an opportunity.
The company is dealing with the state-owned Government Housing Bank (GH Bank) to buy its non-performing personal loans. It also plans to buy more credit card loans.
For distressed auto loans, BAM wants to be cautious because they are more complicated than consumer loan products, especially the debt collection process. Aggressive loan collection, a normal practice in this sector, is not a part of BAM's operations, as a state-owned financial institution.
The infrastructure base is another key factor for bad car loan management, such as seized parking spaces, said Mr Sak.
BAM, the country's largest asset management company, just bought 2.3 billion baht in bad assets from Bank of Ayudhya. It is also in the process of buying just under 1 billion baht of NPLs from Standard Chartered Bank (Thai), and 6 billion baht in bad assets from GH Bank covering 15,000 customer accounts.
Of the mortgage accounts for GH Bank, 50% are condominium projects, with the remainder townhouses and single detached homes.
In July, BAM bought 9 billion baht in bad assets with 16,000 accounts from GH Bank.
"Lower-income borrowers make up a significant proportion of the bad loans bought from GH Bank, which has affected the economy and their ability to make debt payments," he said.
For the first nine months of the year, the company purchased 14 billion baht in NPLs from other financial institutions, as well as non-performing assets (NPAs) worth 2.8 billion baht. Despite the economic slowdown, demand for NPAs remained strong.
BAM recorded NPA sales of 5.54 billion baht from 1,950 items for the first nine months of the year. Its NPA portfolio stands at 37.01 billion baht with 11,472 items.
BAM showed bad asset management for the first nine months of the year, with 12.06 billion baht in bad assets, above its full-year target of 10.30 billion. Its booking net profit was 3.5 billion baht. As a result, the company expects to exceed its projected net profit of 3.60 billion.
BAM still plans to list on the SET in the third quarter next year.