Tisco Financial Group, the parent of Tisco Bank, is warning of a lower net profit this year due largely to the stuttering first-half economy and a sharp decline in domestic car sales.
Despite the improved second-half economic view, Tisco expects loans outstanding to shrink by 2-3% this year.
Tisco, the country's leading automobile lender, forecasts a 40% dive in Thailand's new-car sales to 850,000 this year.
A 40-50% drop in used-car appraisal prices, aggravated by the former government's first-time car buyer scheme, is another factor dampening the bank's profitability, said chief executive Oranuch Apisaksirikul.
Tisco posted a net profit of 1.93 billion baht in the first half, down by 16.7% year-on-year, while total credit fell by 4.6% from the end of 2013.
Demand for car loans is improving and should return to normal in the fourth quarter, said Mrs Oranuch, adding the bank's non-performing loans peaked the previous quarter. The bank's bad loans reached 2.27% of outstanding loans worth 280 billion baht at the end of June, up from 1.29% at the end of 2013. Tisco plans to cut the ratio to 2% by year-end.
Car loans represent the biggest share of the bank's loan portfolio at 180 billion baht or 64.2% of loans outstanding.
TISCO shares closed yesterday on the SET at 41.75 baht, up 75 satang, in trade worth 52.5 million baht.