Tisco sells loan portfolio to Citi

Tisco sells loan portfolio to Citi

Move in line with focus on retail segment, specifically auto lending

A Tisco Bank branch in the Ratchaprasong area. The bank has sold its personal loan and credit card business, including assets valued at 6.9 billion baht, to Citibank's Bangkok branch.
A Tisco Bank branch in the Ratchaprasong area. The bank has sold its personal loan and credit card business, including assets valued at 6.9 billion baht, to Citibank's Bangkok branch.

Tisco Bank and its sister All-Ways Co Ltd have inked a deal to sell their personal loan portfolio and credit card business with a combined asset value of 6.9 billion baht to Citibank N.A. (Bangkok Branch), a move the bank cited as in line with the group's policy to focus on expanding secured loan business.

The deal is expected to be completed by the fourth quarter, Tisco Bank said in a statement without revealing the sales price.

The personal loan portfolio and credit card business are part of the retail banking business with a net asset value of 5.5 billion baht that Tisco Bank and All-Ways acquired from Standard Chartered Bank Thai (SCBT) last October. Other pieces include business loans, wealth management, mortgage loans, bancassurance and retail deposits.

A breakdown of the assets acquired by Tisco includes some 7 billion baht in personal loans, 5 billion baht in business loans, 25 billion baht in mortgages, six branches of SCBT, 300,000 retail customers, 100,000 affluent clients and 4 billion baht worth of credit card business.

"The divestment was made in accordance with the bank's long-term retail strategy to grow secured loans," said Tisco Bank president Sakchai Peechat. "Citibank showed interest in providing products and services that should meet this group of clients' needs."

Auto loans comprise the largest portfolio at the bank at 129 billion baht, representing 51% of loans outstanding.

The bank plans to focus more on mortgages and its core banking business -- auto loans and loan-related products -- which remain the bulk of its retail loan portfolio. Tisco expects positive growth of its retail banking business this year.

In 2017, interest income of Tisco Financial Group, the parent firm of Tisco Bank and All-Ways, was 11.7 billion baht, rising 6.7% year-on-year. Loans outstanding jumped by 11.8% to 251 billion baht at the end of last year.

Tisco delivered a 21.7% increase in 2017 net profit to 6.09 billion baht. Non-interest income also contributed to the bank's strong earnings growth, tallying 6.87 billion baht last year, up 17.8%.

Vira-anong Phutrakul, head of consumer banking at Citibank Thailand, said the bank saw a growth opportunity in the Thai consumer finance business with the acquisition.

The acquisition marks the Citibank Bangkok branch's first foray into an inorganic growth strategy since its establishment. The bank will continue to search for opportunities for asset acquisition to expand the business, Mrs Vira-anong said.

"Growth is a key priority in the consumer banking business in Thailand, and this transaction gives us the opportunity to further scale our business domestically," she said. "As a top credit card issuer in Asia, Citibank will offer these new clients access to market-leading credit card propositions that include our widely acclaimed dining and loyalty programmes, as well as exclusive benefits with our partnerships with leading platform players in the region.

"It was a good time to buy Tisco's assets. The deal will push forward inorganic growth."

The asset quality of the acquired loans is high, said a company spokesperson. The brand strength of both Citibank and SCBT will support Citi's business marketing and promotional efforts.

Tisco expects to complete the transfer of personal loans in the third quarter of this year, and of its credit card business by year-end. Credit cards and personal loans are the bank's key business. Both have been growing steadily in the Thai market, fuelled by Citi's strong brand and good benefits and privileges.

Current customers of Tisco's credit cards and personal loans will continue receiving their existing benefits once the asset transfer is completed. In some cases, they will receive additional benefits.

TISCO shares closed yesterday on the SET at 89.75 baht, up 1.75 baht, in trade worth 382 million baht.

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