The bank wants to raise the ratio of used-car and refinancing loans to equal new-car loans in the next few years from 40:60 at present, said
The shift in focus should improve SCB's margin in car loans from 5.93%, but he did not provide a target margin.
With SCB's sizeable and more diversified strategy for automobile hire purchase loans, its loans outstanding are expected to reach
"Our lending growth is expected to exceed market projections, and we hope to become the top lender for used cars and automobile refinancing over the next few years. We don't want to be the market leader in new-car loans," said
The bank saw a 6% year-on-year contraction in its car loan growth during the first six months of this year, hit by the lacklustre economy.
With the benign economic outlook for the second half and an assumption that full-year new-car sales will be below 1 million units, its automobile lending is expected to shrink by only 2% this year. Some 1.2 million new cars were sold last year.
SCB managed to keep its bad car loans at 2% of its automobile lending portfolio in the first half, up marginally by 20 basis points from the end of last year, thanks to prudent risk management.
Captive finance firms control 40-60% of the new-car loan market, up from 10% in the past.
New-car sales, which have been stuck in a quagmire since last year after the
Meanwhile, SCB targets 5% growth in retail lending this year, following a projection of 3-5% growth.
Its total outstanding loans are worth
SCB shares closed yesterday on the Stock Exchange of
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