The SET-listed Thitikorn Plc (TK), the motorcycle loan lender, says business could slow in the second half of this year, with potential customers tightening belts in the wake of a likely price reduction in the government's rice-pledging scheme.
Deputy managing director Prapol Phornprapha said said farmers' spending could fall if the government cuts its rice scheme buying price, which could hurt the company's loan growth since 65-70% of the company's clients live upcountry.
Despite the grim second-half outlook, Thitikorn is maintaining its 2013 loan growth target of 10% after expanding 14.1% last year to 8.66 billion baht.
The company's lending portfolio grew by 2.6% in the first quarter and 5% in the first half.
The Yingluck Shinawatra administration recently reinstated its rice-pledging price at 15,000 baht a tonne for white rice from 12,000 baht following anger from rice farmers, who are the Pheu Thai Party's main voter base.
However, the 15,000 baht rate will last only until September, after which the government is expected to cut its buying rate.
Mr Prapol said weak exports and the end of government stimulus measures such as the first-time car buyer scheme later this year could also affect company growth in the second half.
Thitikorn has also increased its number of collection teams to handle an expected rise in non-performing loans (NPLs) after the Bank of Thailand revealed rising household debt at the end of last year had surged to 78% of gross domestic product.
Low-income earners will be most vulnerable to an increase in interest rates, which could come soon, said Mr Prapol.
"We're confident our target is reachable since we have plans to handle any new NPLs and penetrate new markets by opening new branches," he said.
Thitikorn has earmarked 10 new branches this year for a total of 90.
The company will also open new branches in two or three countries in the region, with permission from the relevant governments expected this year.
Mr Prapol said the company has prepared for potential interest rate hikes by issuing three-year debentures worth 570 million baht last week with a fixed annual rate of 3.98%.
"We can lock the interest rate costs for three years from the debentures, while a motorcycle loan has a two-year payment period. The most important thing about an issuance is to manage our funding costs to be competitive in the market," he said.
"Our debentures have been welcomed by investors, as we are trusted by the public and have maintained our competitiveness. There are no doubts about our ability to pay interest, and Thitikorn has been rated A- by Tris Rating."
He said Thitikorn's debt-to-equity ratio is just 1.5 times, relatively low compared with the industry average of 8-9 times.
Shares of TK closed last Friday on the SET at 15.30 baht, unchanged, in trade worth 14.1 million baht.
About the author
- Writer: Nuntawun Polkuamdee
Position: Business Reporter