Bank of Ayudhya (BAY) is focusing on the upper-income segment for mortgages in a bid to ensure asset quality amid rising household debt incurred in part from the government's first-time car buyer scheme.
Wichit Phayuhanaveechai, an executive vice-president, said BAY's key target for mortgages is upper-income clients who earn more than 15,000 baht a month.
This group is qualified to buy residential units priced at 2 million baht.
As a result of the focus, the average housing price in BAY's mortgage portfolio is 3 million baht, up from between 2.6 and 2.7 million last year.
Mr Wichit said the payment ability of borrowers in the mass-market segment has been eroded by the first-car scheme.
The mass-market segment is classified as those who earn up to 15,000 a month, most of whom are first-jobbers. They are qualified to buy a unit in the range of 1 to 1.5 million baht.
"Risks with mass-market customers have been rising due to a growing debt-to-income ratio after borrowing under the first-time car buyer scheme," said Mr Wichit.
He said focusing on the upper-income segment will help BAY to control non-performing loans, which stand at 1% of its mortgages.
To pursue the target group, BAY will focus on residential projects by the country's top 10 developers.
The country's fifth-largest bank by assets plans to nearly double its mortgage portfolio to 200 billion baht by 2015 and enter the industry's top three.
BAY is aiming for growth of 30 billion baht or an 11% increase in outstanding mortgages this year.
"Selective property developer partnerships, with a focus on the country's top 10 companies, is one key strategy to meet our ambitious target and control asset quality," said Mr Wichit.
"Residential projects of large property developers are expected to account for 65% of BAY's 30-billion-baht new mortgage growth, up from 55% last year."
The bank continues to offer zero-rate deals on mortgages for six- and 12-month periods, depending on each residential project.
Mr Wichit said zero-rate mortgages will remain available from commercial banks but with an emphasis on selected property projects.
About the author
- Writer: Somruedi Banchongduang
Position: Business Reporter