Personal loan growth focuses BAY

Bank of Ayudhya (BAY) aims to expand personal loans by 14 billion baht this year by letting the unsecured finance portfolio grow, saying risk management is strong enough to handle it.

President Philip Tan said the unsecured loans will offer higher interest income, though they may carry the same risk as non-performing loans (NPLs).

He said the stringent risk management system of the bank's major shareholder, the General Electric group, means that even a 6-9% hike in personal NPLs is acceptable.

But higher personal NPLs would not affect the bank's total NPLs under the consolidated loan portfolio.

Right now the bank's NPLs stand at 2.4% of total outstanding loans, or 830 billion baht. The goal is to control bad debts at a maximum of 2.5%, with total loan growth of 12% this year.

"Under our total loan growth target this year, we can bear rising NPLs," said Mr Tan. "But it should be a reasonable level under the bank's control."

Overall, the consumer finance market last year reported total loans outstanding of 252 billion baht, a growth rate of 18%.

BAY, the country's fifth-largest bank by total assets, saw personal loan growth of 61%, aided by integration with the portfolio of the newly acquired HSBC consumer credit unit. The bank's own personal loan growth was 37%.

Mr Tan said the bank will expand personal loans carefully, maintaining strong risk management and existing criteria for loan approvals.

BAY requires minimum income of 20,000 baht a month for small-business owners and 15,000 baht a month for individual loan applicants. The bank offers a maximum credit line of five times a customer's income or up to 1 million baht per client.

Interest is charged in the range of 19.99% to 28%, depending on loan amount.

About the author

Writer: Somruedi Banchongduang
Position: Business Reporter