More borrowers are likely to seek housing and other conฌsumer loans this quarter due to the positive outlook for the property market, according to a Bank of Thailand survey.
Demand for corporate loans will possibly also rise, particularly from small and mediumsized enterprises, said the survey on financial institutions' lending.
The institutions will, however, continue to tighten lending standards as a result of concerns over asset quality. The debtrepayment ability of both the business and household sectors remains fragile until any economic recovery is sustainable.
"Financial institutions anticipate that the demand for housing loans and other consumer loans will slightly increase. This is a result of an expected improvement in the property sector in the second quarter of the year while lending interest rates have been low," said the central bank's report.
Demand for creditcard loans, however, is expected to decline in the current quarter because of the worsening creditworthiness of debtors.
The financial institutions will increasingly tighten their credit standards for all types of the consumer loans, due to the concerns over asset quality - particularly for housing loans.
"It indicates the financial institutions are more cautious about running businesses while the global and domestic economies have been fragile," the central bank said.
Deputy Governor Bandid Nijathaworn said earlier that the banking system's loans had dropped Bt220 billion over the first six months of the year or 3.4 per cent from the end of last year, due to lower demand and tighter credit approvals.
In the second quarter, the demand for housing and other consumer loans slightly increased from the previous quarter, thanks to attractive lending rates.
The government's measures to boost the property sector, particularly townhouses, also helped bolster the demand for mortgages.
Demand for other consumer loans rose in the second quarter after demand for essential goods picked up. But consumers continued to be cautious about their spending, indicating fragile confidence.
Demand for creditcard loans, however, dropped from the first quarter because consumers were not confident about income security and their job status.
The survey, financial institutions tightened their housingloan standards more than had been expected in the second quarter, despite higher demand. They were concerned about economic recovery and people's debtrepayment ability.
They continued to tighten the criteria for creditcard loans because cardholders' ability to repay debt declined.
An increasing number of debtors were unable pay their debt in time, while those who could not repay within 90 days and had their cards cancelled also rose.
The survey found that demand for corporate loans from large companies declined in the second quarter, in line with demand for inventory production.
Demand for loans for fixed investment and working capital was stable from the first quarter, indicating the economy had already bottomed out.
Thursday, August 27, 2009
SCB aims for 20% in card spending
Siam Commercial Bank aims to raise its share of credit card spending to 20% this year and will shift its marketing focus to encouraging card spending over extending its card base.
Spending via SCB's credit cards currently accounts for 18-19% of the total card market, up from 16% at the end of last year.
SCB expects to hit a 20% market share by the year-end, taking the industry's top spot, said Rungruang Sukkirdkijpiboon, an SCB executive vice-president.
Spending via SCB's credit card is currently about 10 billion baht per month, up from 8 billion last year, bolstered by the bank's marketing campaigns as well as improvements in the economy.
After plummeting in the first quarter of this year with the downturn, the credit card market has picked up from the second quarter. Bankers expect spending will further improve in line with better economic signs and seasonal factors.
Economic recovery would support the credit card business overall, and credit card spending is expected to edge up this year from last year.
SCB will concentrate on boosting spending rather than enlarging its card base under the current economic climate. The bank will aim to maintain about 1.8 million cards, the industry's largest base, throughout this year.
The bank's normal credit-card cancellation rate is between 5% and 10% of all cards, due to inactive cards, customers' dissatisfaction and non-performing loan problems. SCB's distressed debt is 2% of total outstanding loans of 23 billion baht and its delinquency rate is about 4%.
The bank yesterday launched the Beyond Platinum Card to capture the upper market segment earning at least 100,000 baht per month. With the high-end card's benefits, SCB targets issuing 60,000 cards within the first year and 100,000 in the next three year.
Spending via SCB's credit cards currently accounts for 18-19% of the total card market, up from 16% at the end of last year.
SCB expects to hit a 20% market share by the year-end, taking the industry's top spot, said Rungruang Sukkirdkijpiboon, an SCB executive vice-president.
Spending via SCB's credit card is currently about 10 billion baht per month, up from 8 billion last year, bolstered by the bank's marketing campaigns as well as improvements in the economy.
After plummeting in the first quarter of this year with the downturn, the credit card market has picked up from the second quarter. Bankers expect spending will further improve in line with better economic signs and seasonal factors.
Economic recovery would support the credit card business overall, and credit card spending is expected to edge up this year from last year.
SCB will concentrate on boosting spending rather than enlarging its card base under the current economic climate. The bank will aim to maintain about 1.8 million cards, the industry's largest base, throughout this year.
The bank's normal credit-card cancellation rate is between 5% and 10% of all cards, due to inactive cards, customers' dissatisfaction and non-performing loan problems. SCB's distressed debt is 2% of total outstanding loans of 23 billion baht and its delinquency rate is about 4%.
The bank yesterday launched the Beyond Platinum Card to capture the upper market segment earning at least 100,000 baht per month. With the high-end card's benefits, SCB targets issuing 60,000 cards within the first year and 100,000 in the next three year.
Hacker arrest shows card security flaws
Consumers and companies are vulnerable to hackers and identity thieves even after US authorities arrested a man they said was a master hacker who stole 170 million credit and debit card numbers.
Estimates on the total financial impact of breaches vary, but a study by Forrester Research put the cost at up to $305 (10,400 baht) per compromised record when noting the cost of upgrades, notifying customers and legal and marketing expenses.
"Under our banking laws, it's the financial institutions that will be stuck paying for fraudulent use of credit cards.We have the consumers responsible for $50 and the rest winds up on the card issuer," said Joel Reidenberg, a professor at Fordham Law School who teaches privacy law.
On Monday, three men were indicted on charges of stealing more than 130 million credit and debit card numbers in what US authorities said they believed was the largest hacking and identify theft case ever prosecuted in the United States.
Former government informant Albert Gonzalez,28, in jail in connection with other hacking cases, has been accused of masterminding the theft. He was charged along with two Russians with conspiracy to gain unauthorised access to computers, to commit fraud in connection with computers and conspiracy to commit wire fraud.
Card numbers were stolen in those breaches from credit-card processor Heartland Payment Systems and retail chains 7-Eleven Inc and Hannaford Brothers Co, a unit of Belgium's Delhaize Group, prosecutors said. They said the men targeted two other corporations,which they did not name.
Mr Gonzalez pleaded not guilty to last year's charges of hacking into the systems of several major retailers,including TJX Cos Inc. Prosecutors have said that 41 million numbers were stolen in the TJX case.
"Charging this individual is a great development, but hacking and other forms of fraud are pervasive these days,"said Beth Givens, executive director of the Privacy Rights Clearinghouse, a nonprofit organisation in San Diego.
Mr Gonzalez is accused of breaching computer networks of companies that have said they met tough standards set by the payment processing industry.
His alleged crimes would account for a majority of compromised records,which Ms Givens' group estimates at around 263 million.
Estimates on the total financial impact of breaches vary, but a study by Forrester Research put the cost at up to $305 (10,400 baht) per compromised record when noting the cost of upgrades, notifying customers and legal and marketing expenses.
"Under our banking laws, it's the financial institutions that will be stuck paying for fraudulent use of credit cards.We have the consumers responsible for $50 and the rest winds up on the card issuer," said Joel Reidenberg, a professor at Fordham Law School who teaches privacy law.
On Monday, three men were indicted on charges of stealing more than 130 million credit and debit card numbers in what US authorities said they believed was the largest hacking and identify theft case ever prosecuted in the United States.
Former government informant Albert Gonzalez,28, in jail in connection with other hacking cases, has been accused of masterminding the theft. He was charged along with two Russians with conspiracy to gain unauthorised access to computers, to commit fraud in connection with computers and conspiracy to commit wire fraud.
Card numbers were stolen in those breaches from credit-card processor Heartland Payment Systems and retail chains 7-Eleven Inc and Hannaford Brothers Co, a unit of Belgium's Delhaize Group, prosecutors said. They said the men targeted two other corporations,which they did not name.
Mr Gonzalez pleaded not guilty to last year's charges of hacking into the systems of several major retailers,including TJX Cos Inc. Prosecutors have said that 41 million numbers were stolen in the TJX case.
"Charging this individual is a great development, but hacking and other forms of fraud are pervasive these days,"said Beth Givens, executive director of the Privacy Rights Clearinghouse, a nonprofit organisation in San Diego.
Mr Gonzalez is accused of breaching computer networks of companies that have said they met tough standards set by the payment processing industry.
His alleged crimes would account for a majority of compromised records,which Ms Givens' group estimates at around 263 million.
Yunus opens centre at AIT
Nobel laureate Muhammad Yunus who introduced micro-credits in rural Bangladesh - has launched a centre at the Asian Institute of Technology to explore new avenues for tackling poverty in the region.
"If you want to see poor people get out of poverty, you have to change the system," Mr Yunus said yesterday after the official launch of the Yunus Center at the AIT in Pathum Thani province.
The winner of the 2006 Nobel Peace Prize for his pioneering concept of microcredits and this year's winner of the US Presidential Medal of Freedom, has chosen the 50-year-old AIT as his povertyfighting partner.
"We have challenged the financial institutions who do not lend money to the poor," Mr Yunus said of his past successes in introducing micro-credit systems to the rural poor in Bangladesh.
His micro-credit model has become popular in many developing countries.
"This is particularly remarkable at a time when big banks, with lots of collateral and lawyers around them, are collapsing," he said."While micro-credit is working everywhere without collateral,without lawyers and repayments have remained as high as ever."
"If you want to see poor people get out of poverty, you have to change the system," Mr Yunus said yesterday after the official launch of the Yunus Center at the AIT in Pathum Thani province.
The winner of the 2006 Nobel Peace Prize for his pioneering concept of microcredits and this year's winner of the US Presidential Medal of Freedom, has chosen the 50-year-old AIT as his povertyfighting partner.
"We have challenged the financial institutions who do not lend money to the poor," Mr Yunus said of his past successes in introducing micro-credit systems to the rural poor in Bangladesh.
His micro-credit model has become popular in many developing countries.
"This is particularly remarkable at a time when big banks, with lots of collateral and lawyers around them, are collapsing," he said."While micro-credit is working everywhere without collateral,without lawyers and repayments have remained as high as ever."
LOBBY WEAKENS US CAMPAIGN
Nearly 5 million of the worst-polluting vehicles in the US have been quietly excluded from the popular "Cash for Clunkers" progrkamme after lobbyists for antique auto-parts suppliers and car collectors persuaded the government to shut out cars built before 1984.
The restriction has prevented consumers who own older cars and pickups from cashing in on the US$3-billion (Bt102 billion) federal programme even though many do not consider their jalopies to be collectors' items.
When the federal government announced the rebates of up to $4,500, Chris Hurst said it looked like the perfect time to unload his gas-guzzling 1981 Ford F-150, California, was surprised to discover his pickup was too old to qualify.
"If we could have gotten that rebate, it would have worked perfectly for us," said Hurst, who is now trying to sell the vehicle, equipped with Ford's biggest V8 engine, for $1,600.
The restrictions were pushed by lobbyists fot the Specialty Equipment Market Association (Sema), a California group representing companies that sell parts and services to classic and antique car collectors. The group, as well as classic car enthusists, have oppesed "Cash for Clunker", because they do not want older vehicles to be destroyed.
When the proposals for the clunker buy-back programme surfaced early this year, Sema opposed the entire concept, because such a programme could shrink the size of the market for after-market parts. Sema eventually succeeded in getting lawmakers to adopt the aage restriction.
"We are very pleased that Congress was able to include that in the programme," said Stuart Gosswein, director of regulatory affairs at Sema.
The organisation represents more thna 7,000 comapnies that make all manner of auto-related products, including reproduction Model T tyres and AMC Gremlin upholstery. The powerful interest group earlier won legislative batteles to protect owners of classic cars and hot rods from laws covering vehicle noise and emissions tests, among other things.
Consumer kand environmental groups reluctantly went along with the Sema provision, because they were too busy fighting for any rule that would push consumers to buy more fuel-efficient vehicles than the ones they were using.
"I don't know that the programme makes a whole lot of environmental sense," said Lena Pons, a policy analyst for Public Citizen, which pushed for tougher fuel-economy standards.
"There is not a whole lot of justification for the classic-car industry to block older vehicles from being traded in."
Other critics fault the age limit on economic grounds, saying it makes little sense even for collectors.
"If I own a 30-year-old Mustang, the value of my car goes up if others get destroyed," said Chris Edwards, an economist for the libertarian Cato Institute.
"It is a typical industry loophole that doesn't protect the little guy but does protect some special-interest groups."
Many Americans do not have the money to buy a new car, said Dan Baker, a part-time handymand and gardener in South Carolina who said he wished he could have qualified for a rebate to upgrade to a better used vehicle.
"I'm the kind of person this programme could have helped," he said.
Baker is trying to sell a brown 1980 Oldsmobile Cutlass SS with a broken air-conditioner and rusty fenders for $1,200.
"It's just an old car with 101,000 miles on it," Baker said. "It is not a classic."
Groups representing salvajge yards and service garages also derailed a provision in the bill that would have required the entire drive train of traded-in clunkers to be destroyed. Junkyards are now permitted to strip and resell all parts of the vehicles, exept the engines.
The restriction has prevented consumers who own older cars and pickups from cashing in on the US$3-billion (Bt102 billion) federal programme even though many do not consider their jalopies to be collectors' items.
When the federal government announced the rebates of up to $4,500, Chris Hurst said it looked like the perfect time to unload his gas-guzzling 1981 Ford F-150, California, was surprised to discover his pickup was too old to qualify.
"If we could have gotten that rebate, it would have worked perfectly for us," said Hurst, who is now trying to sell the vehicle, equipped with Ford's biggest V8 engine, for $1,600.
The restrictions were pushed by lobbyists fot the Specialty Equipment Market Association (Sema), a California group representing companies that sell parts and services to classic and antique car collectors. The group, as well as classic car enthusists, have oppesed "Cash for Clunker", because they do not want older vehicles to be destroyed.
When the proposals for the clunker buy-back programme surfaced early this year, Sema opposed the entire concept, because such a programme could shrink the size of the market for after-market parts. Sema eventually succeeded in getting lawmakers to adopt the aage restriction.
"We are very pleased that Congress was able to include that in the programme," said Stuart Gosswein, director of regulatory affairs at Sema.
The organisation represents more thna 7,000 comapnies that make all manner of auto-related products, including reproduction Model T tyres and AMC Gremlin upholstery. The powerful interest group earlier won legislative batteles to protect owners of classic cars and hot rods from laws covering vehicle noise and emissions tests, among other things.
Consumer kand environmental groups reluctantly went along with the Sema provision, because they were too busy fighting for any rule that would push consumers to buy more fuel-efficient vehicles than the ones they were using.
"I don't know that the programme makes a whole lot of environmental sense," said Lena Pons, a policy analyst for Public Citizen, which pushed for tougher fuel-economy standards.
"There is not a whole lot of justification for the classic-car industry to block older vehicles from being traded in."
Other critics fault the age limit on economic grounds, saying it makes little sense even for collectors.
"If I own a 30-year-old Mustang, the value of my car goes up if others get destroyed," said Chris Edwards, an economist for the libertarian Cato Institute.
"It is a typical industry loophole that doesn't protect the little guy but does protect some special-interest groups."
Many Americans do not have the money to buy a new car, said Dan Baker, a part-time handymand and gardener in South Carolina who said he wished he could have qualified for a rebate to upgrade to a better used vehicle.
"I'm the kind of person this programme could have helped," he said.
Baker is trying to sell a brown 1980 Oldsmobile Cutlass SS with a broken air-conditioner and rusty fenders for $1,200.
"It's just an old car with 101,000 miles on it," Baker said. "It is not a classic."
Groups representing salvajge yards and service garages also derailed a provision in the bill that would have required the entire drive train of traded-in clunkers to be destroyed. Junkyards are now permitted to strip and resell all parts of the vehicles, exept the engines.
CARD OFFERS MAY INDICATE US TURNAROUND
Could a sign of economic recovery in the US be in American's mail-boxes?
Synovate, which tracks credit-card solicitations, last week reported card offers mailed to consumers in that country dropped 6 per cent quarter on quarter in the second quarter, a far milder decline than recently before. And some big issuers, such as Bank of America and Citibank, actually have increased their offerings.
"That's the flattening out or bottoming out," said Anuj Shahani, director of competitive tracking services at Synovate's financial services group.
Of course, card issuers are still stingy with credit and picky about whom they send offers to. Shahani said only the most creditwrothy consumers with Fair Isaac credit scores of 700 points or higher were receiving offers. And even if you are among this select group, you probably will notice one change: no more fixed-rate cards.
Meanwhile, everyone else with a credit card may soon see other changes when some provisions of the new credit-card-reform law kick in on August 20.
It was only in last year's second quarter when card issuers stuffed 1.06 billion offers in consumer mailboxes, Synovate said.
Since then, issuers overall have reduced their mailings by double-digit percentages from quarter to quarter, including a 44-per-cent drop between last year's fourth quarter and this year's first quarter.
In this year's second quarter, mailings reached 349.1 million, down 6.2 per cent quarter on quarter, Synovate said.
Yet some major issuers ramped up offers. Bank of America sent out 55.2 million mailings in the second quarter, up 77 per cent quarter on quarter, Synovate said. Citibank increased its mailings 65 per cent to 56.1 million.
Card issuers do not want to go too far out on a limb, Shahani said. But they do not want to be the last to extend credit either.
"Otherwise, someone else will get in and take customers away," he said.
Most solicitations also occurred laste in the second quarter, another sign issuers might be overcoming a reluctance to extend credit, Shahani said. But do not expect an industrywide uptick in offers until next year, he said.
If you do receive card solicitations, they will not be for a fixed-rate card.
"They are a dying breed," said Curtis Arnold, founder of www.cardratings.com, which tracks cards.
He said much of that had to do with credit-card-reform legislation that was signed into law in May.
Card issuers for years have had great leeway in changing a fixed rate with little notice.
Credit-card reforms will allow issuers to claim a card has a fixed rate only if it cannot be changed for a certain period that is clearly spelled out, Arnold said. Card issuers, worried of running a foul of the new law, are sticking with variable-rate cards.
Most card reforms kick in next February, but two provisions take effect next week.
The first requires card companies to mail bills at least 21 days before payment is due instead of the 14 days that has become the norm for some issuers.
The second requires card issuers to give 45 days' notice before raising the interest rate or significantly changing card terms. (No notice is necessary if the rate on a variable interest card goes up, because its benchmark rate has risen.)
Consumers often complain about the short time they have to mail in their payments, so the extra week will be helpful, said John Ulzheimer, president of consumer education at www.credit.com.
But the 45-day notice provision will probably have little effect, because consumers tend to ignore notices anyway, he added.
"Card issuers are still stingy with credit and picky about whom they send offers to. Only the most creditwrothy consumers with Fair Isaac credit scores of 700 points or higher are receiving offers."
Synovate, which tracks credit-card solicitations, last week reported card offers mailed to consumers in that country dropped 6 per cent quarter on quarter in the second quarter, a far milder decline than recently before. And some big issuers, such as Bank of America and Citibank, actually have increased their offerings.
"That's the flattening out or bottoming out," said Anuj Shahani, director of competitive tracking services at Synovate's financial services group.
Of course, card issuers are still stingy with credit and picky about whom they send offers to. Shahani said only the most creditwrothy consumers with Fair Isaac credit scores of 700 points or higher were receiving offers. And even if you are among this select group, you probably will notice one change: no more fixed-rate cards.
Meanwhile, everyone else with a credit card may soon see other changes when some provisions of the new credit-card-reform law kick in on August 20.
It was only in last year's second quarter when card issuers stuffed 1.06 billion offers in consumer mailboxes, Synovate said.
Since then, issuers overall have reduced their mailings by double-digit percentages from quarter to quarter, including a 44-per-cent drop between last year's fourth quarter and this year's first quarter.
In this year's second quarter, mailings reached 349.1 million, down 6.2 per cent quarter on quarter, Synovate said.
Yet some major issuers ramped up offers. Bank of America sent out 55.2 million mailings in the second quarter, up 77 per cent quarter on quarter, Synovate said. Citibank increased its mailings 65 per cent to 56.1 million.
Card issuers do not want to go too far out on a limb, Shahani said. But they do not want to be the last to extend credit either.
"Otherwise, someone else will get in and take customers away," he said.
Most solicitations also occurred laste in the second quarter, another sign issuers might be overcoming a reluctance to extend credit, Shahani said. But do not expect an industrywide uptick in offers until next year, he said.
If you do receive card solicitations, they will not be for a fixed-rate card.
"They are a dying breed," said Curtis Arnold, founder of www.cardratings.com, which tracks cards.
He said much of that had to do with credit-card-reform legislation that was signed into law in May.
Card issuers for years have had great leeway in changing a fixed rate with little notice.
Credit-card reforms will allow issuers to claim a card has a fixed rate only if it cannot be changed for a certain period that is clearly spelled out, Arnold said. Card issuers, worried of running a foul of the new law, are sticking with variable-rate cards.
Most card reforms kick in next February, but two provisions take effect next week.
The first requires card companies to mail bills at least 21 days before payment is due instead of the 14 days that has become the norm for some issuers.
The second requires card issuers to give 45 days' notice before raising the interest rate or significantly changing card terms. (No notice is necessary if the rate on a variable interest card goes up, because its benchmark rate has risen.)
Consumers often complain about the short time they have to mail in their payments, so the extra week will be helpful, said John Ulzheimer, president of consumer education at www.credit.com.
But the 45-day notice provision will probably have little effect, because consumers tend to ignore notices anyway, he added.
"Card issuers are still stingy with credit and picky about whom they send offers to. Only the most creditwrothy consumers with Fair Isaac credit scores of 700 points or higher are receiving offers."
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