Krungsri Leasing set to buck car loan trend
The Bank of Ayutthaya’s automotive leasing arm, Ayutthaya Capital Auto Lease (and better known simply as Krungsri Auto), has raised its new-loan target from 104 to 108 billion baht for 2015.
Although this represents just a 3.8 percent increase, it comes at a time when the vehicle industry is in the middle of a serious slump overall. The Federation of Thai Industries’ automotive industry division recently cut its expected domestic car sale numbers from 850,000 units to between 750,000 and 800,000 for this year. In the first seven months of this year sales were down 15.8 percent at just under 430,000 units.
Despite these gloomy overall numbers, Krungsri Auto’s new loans reached 55.9 billion baht at the end of June, taking its loans level to 239 billion baht, up by 10 billion baht from the end of 2014.
If the new target is reached it will represent a six percent growth on last year’s figures at a time when the overall automotive sector itself is forecast to contract by anywhere from one to five percent.
Part of the reason for Krungsri Auto’s against-the-trend performance is, according to its managing director Pairote Cheunkrut, its synergy with the Bank of Tokyo-Mitsubishi UFJ, the major shareholder in the Bank of Ayutthaya. The Japanese parent provides finance for all customer segments in the supply chain within the automotive industry.
As Pairote notes, Krungsri Auto has continually worked on adjusting its business strategies to suit the prevailing economic climate, making sure that one of banes of such an industry, namely, non-performing loans (NPLs), are kept to less than two percent of the total loan portfolio.
Digital marketing has been one of its key strategies, having launched an online channel in 2014. Last year the digital channel raised 70 million baht in loans; this year the expectation is that it will bring in 200 million baht.
The company said it will not engage in any kind of a price war with its competitors, but rather intends to maintain asset quality as the key driver for its success.
Krungsri Auto is the number one refinance lender by portfolio in Thailand and it expects to continue to see expansion for the rest of the year. One of Krungsri Auto’s brands is Its Car for Cash loan portfolio which management aims to grow by four percent this year to reach 53 billion baht.
Car for Cash is one of the strategies Krungsri Auto hopes will see it as the numbe one operator in Thailand for both new and used-car loans.