Tisco Bank is looking to acquire a new retail loan portfolio and sees greater opportunity in the auto hire-purchase loan segment as some business operators may be impacted by the new regulations pertaining to the ceiling interest rate of hire-purchase loans.
The bank is ready to consider a new merger and acquisition deal, focusing on unsecured consumer loan business.
The new regulations of the Office of the Consumer Protection Board (OCPB) on the ceiling interest rates of auto hire-purchase loans could affect some small businesses in this segment. However, the bank has yet to identify such a deal, said chief finance executive Chatri Chandrangam.
According to the OCPB's new rules for contracts of car and motorcycle hire purchase, the authority has set a low ceiling interest rate for new car loans of 10% per year, or an average fixed rate of 5.5% per year, while for used car loans the ceiling is 15%, or 8.5% of the fixed rate.
Motorcycle loans have a maximum of 23%, or 12.5% of the fixed rate. The new regulations came into effect on Jan 10.
Tisco acquired the retail loan portfolio from Standard Chartered (Thai) Bank, covering both secured and unsecured loans, in 2016, selling the unsecured loan portfolio to Citibank in 2018.
Sakchai Peechapat, chief executive of Tisco Financial Group, a holding company of Tisco Bank, said the bank's subsidiary, Hi-Way -- under the Somwang brand -- also is also feeling the impact from the OCPB's new rules, mainly concerning motorcycle loans.
The bank regularly charges a maximum interest rate for motorcycle loans at 30% per year and it would face a significant impact on its loan margin after the OCPB set the ceiling rate at 23%.
As a result, the bank's auto loan business has adjusted business strategies to handle the two risk factors this year, which are a rising trend in interest rates and the OCPB's new ceiling interest rate.
