Tisco Bank aims to book positive loan growth for 2022 – for the first time since the Covid-19 outbreak – primarily fueled by expansion of used car and corporate loans.
Sakshaye Petchabat, chief executive of the bank, said the bank has set total loan growth for 2022 at 5%, the first year to record positive growth since loan expansion slowed over recent years due to the impact of Covid-19. Tesco Financial Group, the holding company of Tesco Bank.
Tisco loans expanded 0.9% in 2019, then recorded contractions for two consecutive years of 7.4% in 2020 and 9.7% in 2021.
He said selective growth is the bank’s main strategy to expand its total loan portfolio by 5% this year amid an uneven economic recovery and many uncertainties, particularly the impact of the Omicron variable.
This year, the bank will focus mainly on used car loans, auto ownership loans and corporate loans, in line with the positive demand of the loan sectors.
Auto and vehicle related loans are the core business of the bank, accounting for the bulk with 70.98% of the total outstanding loans.
As of December 31, 2021, the bank’s loan portfolio totaled 202.95 billion baht, of which 112.40 billion baht was a car rental loan and 31.67 billion baht was a vehicle ownership loan.
Initially, Tisco expected minimal new car sales for this year in line with economic conditions, but it needs to wait for the exact numbers announced by automakers.
As a result, the bank is focusing primarily on the growth of used car loans rather than new car loans this year. Car ownership loans are also showing positive demand. Its total portfolio of auto loans is expected to grow this year by 3-4%.
In addition, Mr. Sachshai said the demand for corporate loans, especially in the alternative energy and real estate sectors, is improving.
The ESG trend supports renewable energy investment projects, while the central bank’s easing of mortgage loans has been encouraging investment in new housing projects. The bank has identified double-digit growth in corporate loans this year.
Given the selective growth of retail used car loans and auto equity loans, which are high-risk sectors, the bank’s non-performing loans may rise this year. But he said it would be at a manageable level with the bank’s strong risk management.
The bank’s non-performing loan ratio peaked at 3.98% during 2020 before declining to 2.5% by the end of the year, and continues to decline to 2.4% at the end of 2021, thanks to debt restructuring measures.
The improvement in the non-performing loan rate also caused the bank to adjust the loan loss provision from 3.33 billion baht in 2020 to 2.06 billion baht in 2021.
As a result, Tisco generated a net profit of 6.78 billion baht in 2021, an increase of 11.84% year-on-year.