SCB plans to get into lending for commercial vehicles - The Nation

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SCB

Sucheera Pinijparakarn

The Nation
June 10, 2013 1:00 am

Thanachart Bank and Krungsri Auto are the market leaders in auto lending.

Narong Srichukrin, first executive vice president and head of SCB's auto finance business division, said the bank was studying the commercial-vehicle market and expected to join the segment next year.

Lending for commercial-vehicle purchase is regarded as a high-yield business. Such vehicles are used in construction and subcontracting businesses, which will benefit from the government's infrastructure projects, while the borrowers' good liability is attracting lenders to secure this market.

SCB is also looking to get into motorcycle instalment loans, he said. The bank will not set up new subsidiaries to handle these new segments because it believes awareness of its brand and its large nationwide network will attract customers.

Narong noted that with the end of the government's first-car-buyer project, new auto loans were expected to shrink by 6 per cent to Bt800 billion from Bt860 billion last year. However, outstanding loans this year will be able to grow from the used-car market, forecast at Bt1.77 trillion, up from Bt1.5 trillion in 2012.

SCB estimates new loans this year at Bt120 billion, up from Bt100 billion last year, as it focuses more on used-car loans and strongly promotes its "My Car My Cash Prompt" product.

The bank plans to boost the proportion of used-car loans to 35 per cent by the end of this year from 30 per cent now.

Used-car loans and the new |cash-for-car products are expected to increase the car-loan portfolio from Bt180 billion year to date to Bt220 billion by year-end. Of the Bt180 billion, new-car loans account for Bt125 billion, Bt35 billion for used cars and the rest My Car My Cash.

He said the bank spent 12 months to develop MCMC Prompt to fill the gap between used-car loans and the My Car My Cash product.

The new product was designed for vehicle customers who prefer the convenience of withdrawing money when they want liquidity. Applicants can secure up to 80 per cent loan to value (LTV) to a maximum of Bt2 million at an interest rate of 18 per cent per annum. Interest will be charged only when the loan is drawn down. MCMC Prompt is suitable for business operators, Narong said.

SCB will offer ATM cards to the approved customers, and if they do not use the card for withdrawals, the bank will not charge interest. Vehicle age is limited to 10 years.

He said the bank expected half of MCMC Prompt customers would use the overdraft and this would help drive the portfolio of My |Car My Cash to Bt30 billion by year-end from Bt20 billion.

SCB is expanding the used-car customer base upcountry, especially in the Northeast. Lending upcountry this year is targeted to increase to 60 per cent from 55 per cent, he said.

Both used-car loans and My Car My Cash are high-yield products. The flat rate for a used-car loan is 3.5-4 per cent per annum for vehicles aged up to four years and 5-6 per cent for vehicles age seven to 10 years, higher than the 2.5-per-cent rate for a new-car loan.

Of 1.3 million new-car sales under the first-car scheme, 700,000 units were delivered last year and the remainder are being transferred to buyers this year. However, about 100,000 purchases are expected to be cancelled. The cancellations will not hurt the lenders as the buyers did not handle the financial transactions, but the dealers did.

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Source: http://www.nationmultimedia.com/business/SCB-plans-to-get-into-lending-for-commercial-vehic-30207895.html

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