Kasikorn Leasing (KLeasing), the automobile leasing arm of Kasikornbank, plans to double its refinancing portfolio in the next three years to increase long-term profitability.
KLeasing wants to double its automobile refinancing loans in three years in a move to add yield and risk to its loan portfolio. Pattarachai Preechapanich
Acting managing director Surat Leelataviwat said the company plans to see its auto-refinancing loan portfolio at 20% of total outstanding car loans in three years, up from 9% now as it expands its overall margin in the high-yield auto leasing business.
KLeasing pulled out of the high-yield used car loan business two years ago.
Its strategy is to mix low yields and risk with high yield and riskier loans in its portfolio to have a balance between revenue expansion and asset quality.
Mr Surat said business had slowed in auto financing, but opportunities remained in refinancing loans with their higher yields than new-car loans and reasonable level of risk.
"You could estimate the income generated from lending on five new cars is equal to only one car-refinancing loan, on average. Our auto-refinancing outstanding loans are still small at around 8 billion baht," he said.
new-car loans represent the lion's share of its portfolio at 60%, some 88.06 billion baht, followed by 26% fleet loans, 9% car-refinancing loan, and 5% floor plan loans provided to car dealers.
KLeasing still has around 10 used car loans left in its portfolio out of 100 car loans. The fiercer competition among leasing firms and higher non-performing loans (NPLs) in the segment were key reasons the company left the business.
It booked mild growth on outstanding loans of 3.67% in the first half of the year compared with the same period the year before despite a lower growth rate of new-car loans in line with the country’s economic circumstances as well as the vehicle industry. Thailand’s new-car sales in the first half of the year were 440,911 units, down 40.5% year-on-year.
The company posted a first-half net profit of 247 million baht, an increase of 6.47% from the same period the year before, and expects to achieve its full-year target of 470 billion baht.
KLeasing wants to maintain NPLs at their existing level of 1% of the total loan portfolio by the end of this year.