Thanachart Bank (TBank) has strengthened its debt collection segment to deal with rising non-performing loans (NPLs), though it expects bad loans to gradually decline in the second half as the economy rebounds.
Somjate: Attempt to reduce bad loans
The bank, which focuses on car loans, has increased both its in-house debt collection staff and hiring of outsourcing companies in a bid to reduce its bad loans, said chief executive Somjate Moosirilert.
It recruited 10 more debt collectors for its staff, now numbering over 100, while hiring outside companies to better cover its loan collection across the country. But the uptick in debt collectors is moderate as it expects the NPL situation to ease as the economy rebounds in the second half. Moreover, the bank may provide assistance on a case-by-case basis to customers having trouble with repayment, said Mr Somjate.
TBank’s NPL ratio of 4.61% of its total loan portfolio in June rose from 4.49% at the end of last year, but lower than 4.68% at the end of March.
As of June the bank had the second-highest bad loan ratio among its banking peers, after only Kiatnakin Bank, another car lender, which stood at 5.6%, with 2% of those car loans.
NPL divestment and legal processes are other tactics used to manage bad loans, he said. The bank classifies debt collection in three phases and spends a maximum of 18 months on these phases before passing the overdue loan to the legal system.
Car hire-purchase loans are the bank’s core business, with 54.5% of total loans outstanding making up 784 billion baht, followed by corporate and commercial loans at 30.6%, mortgage loans at 11%, and others making up the rest.
For the first six months of the year, the TBank's total loans dropped 1% as 1.57% growth in corporate and commercial loans failed to offset a 3.06% contraction in auto loans.
Car lenders have suffered from the Yingluck Shinawatra government's tax rebate scheme for first-time car buyers as the programme cut future demand and lowered the debt-servicing ability of borrowers.
Mr Somjate predicts the bank will book flat loan growth this year. It would need to record a big rise in loans in the second half to offset the first-half contraction, with wholesale and small and medium-sized enterprises the major drivers.
"Midsized corporations with assets in the hundreds of millions of baht will be the bank’s targets," he said.