Tisco expects to beat full-year loan growth target of 5%

tisco expects to beat full-year loan growth target of 5%

A branch of Tisco Bank in Bangkok. The bank believes it will be able to expand its total outstanding loans by 6-7% this year. Patipat Janthong

Tisco Bank expects total loan growth for 2022 to exceed its 5% full-year target after booking credit expansion of 5% for the first nine months amid economic recovery.

The bank believes it can expand its total outstanding loans by 6-7% this year.

Meanwhile, overall loan demand is expected to improve in the final quarter in line with the economic rebound and seasonal factors, said Sakchai Peechapat, chief executive of Tisco Financial Group, the holding company of Tisco Bank.

As of September this year, Tisco had expanded its total loan portfolio by 5% year-on-year to 213.1 billion baht, resulting mainly from an aggressive growth rate of commercial and corporate loans at 43.8% and 22.4%, respectively.

However, hire purchase loans, which represent 72.4% of total loans outstanding, dropped 3%, while retail loans contracted by 1%.

Mr Sakchai said overall loan demand is expected to improve in the fourth quarter of this year and continue into 2023, mainly due to higher confidence as Thailand’s economic recovery continues.

In 2023, corporate loans, commercial loans, and car title loans would be the core areas which facilitate the bank’s loan expansion, he added.

“We will focus on corporate loans next year due to stronger loan demand for business expansion in line with the economic rebound. Given the trend of rising interest rates, the business segment will contribute better yields,” Mr Sakchai said.

Tisco has yet to finalise its 2023 business target. The bank expects the country’s GDP growth rate to be in the range of 3.5-3.8%. However, the bank will not concentrate on loan growth rates, but intends to pay attention to asset quality.

With good risk management and long-term debt restructuring measures helping vulnerable customers, the bank expects to control the non-performing loan ratio at a satisfactory level by the end of this year. Therefore, loan loss provisions for the fourth quarter of this year are expected to be steady from the third quarter with existing solid reserves, Mr Sakchai said.

He said the new ceiling interest rate regulations of the Office of the Consumer Protection Board (OCPB) would not significantly impact the bank’s car loan business because most of Tisco’s rate charges already comply with the new rules.

The OCPB has set the ceiling interest rate for hire purchase at no more than 23% for motorcycles, 10% for new cars, and 15% for used cars.

The new regulations could affect the bank’s motorcycle loan business, but only marginally, because its motorbike portfolio is only around 5 billion baht, compared with the bank’s total loan portfolio of around 213 billion baht, Mr Sakchai added.