Bangkok--29 Oct--KASIKORNBANK
Kasikorn Leasing reported new loans extended over the first nine months of this year amounting to 55.73 billion Baht, as the company aims to focus on the “big bikes” market of large-displacement motorcycles, which is expected to jump by as much as 45 percent. Overall auto financing will be slower this year and may not experience a turnaround until the second half of 2014. Mr. Akaranant Thitasirivit, KLeasing Managing Director, said that over the first nine months of 2013, the company extended new hire purchase and auto leasing loans of 55.73 billion Baht, resulting in total outstanding loans of 86.81 billion Baht, achieving 89.68 percent of the company’s target for the entire year at 96.79 billion Baht. KLeasing’s non-performing loans were reported at 0.83 percent. After a special provision that has been set aside amid the prevailing economic volatility that may produce adverse impacts on its customers, the company’s net profits for the first nine months of 2013 amounted to 115 million Baht.
For the last quarter of this year, the automotive market will remain in a slowdown due to the lingering impacts from the end of the first-time car buyer program, as well as the steadily decreasing prices of used cars. According to KLeasing’s business plan, the “big bikes” market, or large-displacement motorcycles, will be the company’s focus towards the end of this year. Kasikorn Research Center is of the view that big bikes will continue to be a fast-growing market. Some foreign automotive producers have already established factories for these larger motorcycles in Thailand, in advance of the ASEAN Economic Community inception in 2015. Consequently, big bike prices are cheaper, while the big bike customer base is expanding. They are high-income earners who are fond of traveling. At least 70,000 big bikes are expected to be sold within this year, for growth of 45 percent from the previous year.
Mr. Isara Wongrung, KLeasing Executive Chairman, said according to KResearch, the auto financing market will continue to grow more slowly from the end of this year through the first half of 2014. Sales promotional campaigns with zero-percent interest and small down payments, to be launched by car dealers in the last quarter of 2013, will help boost the Thai automotive market and maintain overall sales. However, hire purchase lenders may have to be very prudent in their credit consideration, in order to mitigate risks amid the economic slowdown and rising household debts. Overall hire purchase loans are likely to grow 18 percent over-year in 2013, compared to growth of as much as 34 percent in 2012.
Although the Bank of Thailand’s policy rate remains stable at 2.5 percent, overall liquidity is likely to tighten towards the end of this year. Financial institutions are expected to attract customers with high returns for special fixed-term deposits to serve high lending demand and provide liquidity for possible financial volatility. It is virtually impossible to see a decrease in hire purchase rate within this year, as it has been quoted as the lowest among all types of lending rates, with very thin margins, due mainly to intense competition in the auto financing market over the past five years.