BANK TO HIKE PROPORTION OF SECURED LOANS TO 70%

       Amid the tough global financial crisis, Standard Chartered Bank (Thai) is taking a conservative approach as it aims to increase the proportion of secured loans and wealth management to 70 per cent of total portfolio from the current 50 per cent.
       Vikram Issar, senior execuฌtive vice president, consumer banking country head, said that according to a Standard Chartered Bank worldwide study, the proper ratio of secured to unsecured loans should be 80 per cent to 20 per cent.
       As the unsecured loan proportion was at 50 per cent currently, the bank would use every strategy such as pricing, marketing expansion and product innovation to increase the proportion of its secured loan and wealth management business to 70 per cent by 2012.
       "The bank currently mainฌtains a flat growth rate in unseฌcured loans, while it aggressively expands secured loans such as mortgage, which grows by 50 per cent per year. Small and medium enterprise (SME) loans grow by more than 100 per cent a year. Thus, secured loans, including the wealth management business, would grow by 70 per cent per year on average," said Issar.
       The bank must maintain this growth rate to achieve its goal in 2012, when the outstanding retail loan is expected to hit US$1 billion (Bt34 billion).
       The wealth-management busiฌness is expected to dominate 20-25 per cent of the retail business portfolio.
       The securedloan proportion from SME is expectฌed at 10 per cent of the portfoฌlio, while the rest 35-40 per cent will be from mortgage and other secured loans.
       Issar believes the bank will not lose income from the portfolio adjustment, although unsecured loans offer six times higher net interest marฌgin (NIM) than secured loans.
       The bank gains NIM of 2 per cent from secured loans, while it gains NIM of 12-13 per cent from unsecured loans. Therefore, despite the lower proportion of unsecured loans, when the retail portfolio expands it still can maintain the income from retail business with lower risk.
       Currently 60 per cent of income will be from unsecured loans, while the rest will be from secured loans and the wealthmanฌagement business.
       During the rest of the year the bank is offering a lot of promoฌtions for its retail customers - all types of credit cardholders will receive 7 per cent cash back when spending at nine department stores: Tesco Lotus, Big C, Carrefour, Central, The Mall, Emporium , Siam Paragon, Robinson, and Zen until January 31, 2010.
       New personalloan borrowฌers, who choose to pay installฌments for at least 60 months, will be exempted from interest payment during the first six months from September 21 to December 31 this year.
       Customers buying life insurฌance products with a minimum premium of Bt25,000 will receive interest rate of 8.5 per cent per annum in the first month when they deposit at least Bt100,000.
       There is no frontend fee, registration fee, asset assessment fee, and revenue stamp until the end of this year for mortgage borrowers when they buy life insurance.
       Currently, the bank offers two choices of mortgage rates for new homebuyers and for refiฌnancing loan. The first is a Minimum Housing Rate (MHR) minus 4.25 per cent in the first year, MHR minus 1.19 per cent from the second year onwards, while the other choice is at MHR minus 2.75 per cent during the first two years, and then MHR minus 1.19 per cent.
       Two-year-fixed deposit in Marathon Savings account will receive steppedup interest rates beginning at 1 per cent and a maximum of 2 per cent. Besides depositors can withฌdraw money twice a month without fee, but they are required to deposit at least Bt200,000.

       "The bank currently maintains a flat growth rate in unsecured loans, while it aggressively expands secured loans such as mortgage, which grows by 50 per cent per year."