Tisco expects positive credit growth this year

Tisco Bank is targeting positive credit growth in 2022 for the first time since the outbreak of Covid-19, supported mainly by expansion in used-car and corporate lending.

The bank has set total loan growth at 5% for 2022, which would be the first year of positive growth since loan expansion slowed in recent years due to the impact of Covid-19, said Sakchai Peechapat, chief executive of Tisco Financial Group, the Tisco Bank holding company.

Tisco loans rose 0.9% in 2019, then posted two consecutive years of declines of 7.4% in 2020 and 9.7% in 2021.

He said selective growth is the bank’s key strategy to expand its overall loan portfolio by 5% this year amid an uneven economic recovery and multiple uncertainties, particularly the impact of the Omicron variant.

This year, the bank will focus primarily on used car loans, auto title loans and corporate loans, in line with positive demand in the loan segments.

Auto and related vehicle loans are the bank’s core business and account for the largest portion of total outstanding loans at 70.98%.

As of December 31, 2021, the bank’s total loan portfolio was 202.95 billion baht, of which 112.40 billion baht was auto lease loans and 31.67 billion baht was auto title loans.

Tisco originally forecast minimal new car sales this year given the economic circumstances, but it has to wait for exact numbers to be announced by the automakers.

As a result, the bank’s primary focus this year is on used-car loan growth, rather than new-car loans. Auto title loans are also showing positive demand. The entire auto loan portfolio is expected to grow by 3-4% this year.

In addition, Mr. Sakchai said demand for corporate loans has improved, particularly in the alternative energy and real estate sectors.

The environmental, social and governance (ESG) trend has supported renewable energy investment projects, while the central bank’s easing of mortgage lending has encouraged investment in new housing projects. The bank has seen double-digit growth in corporate loans this year.

Given the selective growth of retail lending for used-car loans and auto title loans, which are high-risk segments, the bank’s non-performing loans (NPLs) could rise this year. But it would be at a manageable level under the bank’s strong risk management, he said.

The bank’s NPL ratio peaked in 2020 at 3.98% before falling to 2.5% by the end of the year and falling further to 2.4% by the end of 2021 thanks to debt restructuring measures.

The improving NPL ratio also prompted the bank to adjust loan loss provisions from 3.33 billion baht in 2020 to 2.06 billion baht in 2021.

As a result, Tisco posted net income of 6.78 billion baht in 2021, up 11.84% year-on-year.

Kenneth T. Shippee