CIMB Thai Bank targets 500 million baht in digital personal loans focusing on upper-income segment

CIMB Thai Bank (CIMBT) has announced intentions to expand its digital personal loan offerings in the current year, aiming for a total of 500 million baht whilst primarily focusing on the upper-income segment.

Recently, CIMBT introduced two digital personal loan products – the “Personal Cash” instalment loan and the “Extra Cash” credit line. These products have a combined value of around 14 million baht, according to Tan Keat Jin, the senior executive vice-president and head of consumer banking at CIMBT.

In order to promote these loan products, special interest rates were offered. The interest rate for the Personal Cash loan, which requires instalments over a period of 24 months, is set at 12.9% per year, while the Extra Cash credit line has an interest rate of 11.8%. Meanwhile, the Bank of Thailand has established a 25% per year ceiling for personal loan interest rates.

CIMBT aims to maintain its non-performing loans at a rate of 2.3% by year’s end, slightly lower than last year’s 2.4% rate. To achieve this, applicants for digital personal loan products must have a minimum monthly income of 30,000 baht.

Tan mentioned that the central bank may introduce further regulations for personal loans, particularly targeting low-income or vulnerable segments to manage household debt. He added that any additional regulations would not significantly impact CIMBT, as the bank is focusing on upper-income clients who pose a lower risk.

Tan also revealed that the bank is developing a digital platform for consumer banking, which will include savings, lending, and wealth management services in alignment with the digital era. He believes that the adoption of digital banking by retail customers will continue to grow.

In the near future, loan approvals via the digital platform are expected to account for 20-30% of all loan applications. Unsecured loans, personal loans, and credit cards will be the main products bolstering digital loan growth, Tan noted.

The bank also plans to study the “buy now, pay later” service, a popular feature of numerous digital personal loans. CIMBT aims to offer this service later this year.

In addition, the bank intends to adopt a digital banking platform supporting secured loans, particularly those involving mortgages. CIMBT has established a retail loan growth target of 15% for 2023, encompassing mortgages, auto loans, credit cards, and personal loans.

According to Tan, a double-digit growth rate is considered achievable for personal loans due to the country’s economic recovery and the pent-up demand following the pandemic, particularly in the mortgage products sector, reports Bangkok Post.