Thai bank eyes auto leasing in Laos
Thai bank eyes auto leasing in Laos
Krungsri Consumer, an unsecured-loan lender under the Bank of Ayudhya (BAY), plans to start an auto and personal loan joint venture in Laos in July amid the surge in demand for vehicle loans.
The decision by the financial institution to run an auto leasing business is a strong reflection of the bright future of the Lao economy, which has seen remarkable growth over the past seven years while the kip has remained stable.
This strong economic growth has boosted purchasing power so the bank is confident it can keep bad loans to an acceptable level.
Krungsri Consumer Managing Director Mr Thakorn Piyapan announced last week they would sign a joint venture agreement with a local business partner to provide loans for people in Laos to purchase vehicles.
“Our local partner entered into auto and personal loans in the Lao market less than a year ago, attracted by stronger spending, particularly in vehicles, electrical goods and mobile devices. Our consumer finance there will mainly put focus on the segments,” Mr Thakorn said as quoted in the Bangkok Post last week.
The Thai newspaper also reported that the bank had considered expanding into three neighbouring countries - Laos, Cambodia and Myanmar - and chose Laos because of its clearly defined regulations, the country's close relations with Thailand, and the similarity in culture.
Laos has a population of only 6.4 million people and GDP growth that is smaller than Thailand's, but the country has high growth potential amid fast economic development, said Mr Thakorn.
The number of vehicles in Laos has surged above one million in the past few years after the government allowed banks to issue loans for their purchase. Borrowers can then use their vehicles as surety.
BAY, Thailand's fifth largest bank by assets, already has two branches in Vientiane and Savannakhet, so it has decided to expand its foothold here.
There are six or seven auto leasing lenders in Laos including the Thai company Thitikorn.
Krungsri Consumer, which offers credit card and personal loan products, plans to maintain its leadership position in the business area. It now has 3.12 million credit cards and 2.79 million accounts in personal loans.
It targets expanding its client base to 6.5 million by year-end from 6.22 million at the end of March. The company plans to increase its card spending by 16 percent to 287 billion baht and outstanding loans by 9 percent to 110 billion baht.
vientiane times
