Tisco Bank has shifted its focus back to secured loan business after moving away from unsecured retail lending by offloading its credit card and personal loan portfolio to Citibank Thailand.
Sakchai: Unsecured loans have negatives
"We don't have enough expertise in the unsecured loan business, while there are several negative factors in this business segment," president Sakchai Peechapat told Bangkok Post.
After conducting a business review in the fourth quarter last year, Tisco decided to sell its unsecured loans -- credit cards and personal loans -- with a combined asset value of 6.9 billion baht to Citibank.
The personal loan portfolio and credit card business are part of the retail banking business with a net asset value of 5.5 billion baht that Tisco and its sister All-Ways Co Ltd acquired from Standard Chartered Bank Thai (SCBT) last October. Other pieces include business loans, wealth management, mortgage loans, bancassurance and retail deposits.
A breakdown of the assets acquired by Tisco includes some 7 billion baht in personal loans, 5 billion baht in business loans, 25 billion baht in mortgages, six branches of SCBT, 300,000 retail customers, 100,000 affluent clients and 4 billion baht worth of credit card business.
SCBT exited the retail banking business to comply with its parent bank's policy to concentrate on wholesale banking business in Thailand.
SCBT's deposits, mortgage loans, bancassurance, and wealth management have good asset quality and high potential to support Tisco's business expansion, said Mr Sakchai.
However, the uneven economic recovery, swelling household debt, the central bank's tightening regulations on unsecured loans and intensifying competition have pressured the business, he said.
Several financial institutions joined the bank's unsecured loan bidding, said Mr Sakchai. Business expertise was a factor Tisco used to pick the buyer, in addition to pricing.
Given that credit cards and personal loans do not comprise a large portfolio, it should not affect either customers or the bank's overall business operation, he said.
Mr Sakchai said the transfer of personal loans and credit card accounts to Citibank is expected to be completed in the second quarter and third quarter this year, respectively.
The bank will realise the income when the asset transfer is completed, he said.
Tisco's core retail business, auto loans, showed healthy growth from the beginning of the year in line with the economic recovery and the country's rising new car sales.
