Tisco Bank expects auto loan decline to continue

Tisco Bank expects auto loan decline to continue

Tisco Bank expects auto loans, accounting for 63% of its lending portfolio, to continue their decline over the next two years.

After that, cars whose ownership is locked in for five years under the first-time car buyer scheme can be transferred.

The bank's number of outstanding loans will pick up from late next year after shrinking over the past few years, chief executive Oranuch Apisaksirikul said without elaborating on what would drive the anticipated loan growth.

Total loans for small banks had dropped 3.1% by the end of June from 231 billion baht at the end of last year. Auto loans, meanwhile, fell 4.9% to 145 billion during the same period.

Under the Yingluck Shinawatra government's first-time car buyer scheme, tax rebates of up to 100,000 baht were offered to first-time buyers who bought passenger vehicles with a maximum engine capacity of 1500cc or pickup trucks with unlimited engine capacity but priced no more than 1 million baht.

Car owners, however, are required to maintain ownership of the vehicles for five years if they want to avoid paying back their tax rebates. Meanwhile, Tisco Bank first executive vice-president Metha Pingsuthiwong said loan applications for new cars are returning to the level seen prior to the car buyers' incentive -- 5,000-6,000 per month.

Although the recovery of domestic car sales is picking up steam, the number of cars to be sold this year is expected to be lower than 800,000 units, similar to the rate seen prior to the scheme.

Domestic sales stood at 66,049 units in June, up 9.5% for the third straight month, according to data from the Federation of Thai Industries' automotive industry club.

Domestic car sales edged down by 0.4% year-on-year to 367,481 units for the first half.

Tisco Bank, the country's third-largest auto lender by loan amount, said it would focus more on the used car market -- an area showing signs of recovery -- although it is more risky than new car loans, he said.

Used cars represented 20% of Tisco Bank's outstanding loans at the end of June.

Automobile refinancing loans represent another potential area where the bank is seeking 10% expansion by year-end, up from current outstanding loans of 20 billion baht, added Mr Metha.

Do you like the content of this article?
COMMENT