Krungsri First Choice, a personal loan unit of Bank of Ayudhya (BAY), will keep its focus on mass market segmentation, believing the nationwide minimum wage hike planned for next year will help drive its business.
The government is set to raise the wage to 300 baht per day starting next year for the remaining 70 provinces, after already raising it for seven provinces including Bangkok in April.
The minimum monthly income for those applying for Krungsri First Choice's typical loan is 8,000 baht.
However, this group and those earning less than 10,000 baht a month account for only 20% of its portfolio.
"In fact, clients with monthly salaries of 25,000 to 35,000 baht comprise our largest segment," said senior vice-president Nayanee Peaugkham.
The wage increase will improve consumer purchasing power.
The Labour Ministry reports about 2 million workers will benefit from the wage hike, a raise from an average of 157 baht per day for minimum wage earners across the country.
Despite Krungsri First Choice's concentration on the mass market, she said non-performing loans remain healthy at about 2-3% of total outstanding debt of 26 billion baht.
The capability of borrowers to repay debt is the main condition for approval, she noted.
"Good risk management on loan collection is potentially the next step to control asset quality."
Krungsri First Choice expects customers to reach 2 million accounts this year, of which 300,000 are new accounts, a 17% rise. Last year, new-client growth was in single digits.
The firm used a partnership strategy this year, adding up to 10,000 business partners with more allies planned next year.
She said the expansion of product lines will be made according to consumer lifestyles.
For example, strong loan demand for smartphones and tablets is one crucial factor that will expand the customer base and loan growth. This device demand has also increased its online members, she added.
Some 100,000 of its total are online members, up from 50,000 in 2011.
"Online finance is popular because of its convenience," she said.