CIMB Thai Bank (CIMBT) plans to expand digital personal loans this year, targeting 500 million baht in total by focusing on the upper-income segment.
CIMBT recently introduced two digital personal loan products -- the "Personal Cash" instalment loan and "Extra Cash" credit line, with a total value of around 14 million baht, said Tan Keat Jin, senior executive vice-president and head of consumer banking.
Promotional campaigns offering special interest rates accompanied the loans. The interest rate for the Personal Cash loan, which requires instalments over a period of 24 months, is 12.9% per year, while the interest rate of the Extra Cash credit line is 11.8%.
The Bank of Thailand set a ceiling for personal loan interest rates of 25% per year.
To control its non-performing loans at 2.3% by year-end, slightly lower than last year's rate of 2.4%, applicants for digital personal loan products are required to have a minimum monthly income of 30,000 baht, according to CIMBT.
Mr Tan said the central bank may announce additional regulations for personal loans, particularly for low-income or vulnerable segments to contain household debt.
"If the central bank announces additional regulations for personal loans, it will not impact CIMBT much as the bank is focusing on upper-income clients who have lower risk," he said.
Mr Tan said the bank is developing a digital platform for its consumer banking business that includes saving, lending and wealth management services, in line with the digital era.
He said he believes the adoption of digital banking by retail customers will continue to grow.
The bank expects loan approvals via the digital platform to total 20-30% of all loan applications in the near future. Unsecured loans, personal loans and credit cards are the key products supporting digital loan growth, said Mr Tan.
The bank is also studying a "buy now, pay later" service, a feature of several digital personal loans, and plans to offer such a service later this year, he said.
Moreover, the bank plans to adopt a digital banking platform supporting secured loans, particularly mortgages.
CIMBT set a retail loan growth target of 15% for 2023, which covers mortgages, auto loans, credit cards and personal loans.
A double-digit growth rate is deemed plausible for personal loans as a result of the country's economic recovery and pent-up demand following the pandemic, particularly for mortgage products, said Mr Tan.
