Summit Capital, a leading motorcycle hire-purchase subsidiary of Japan’s Sumitomo Corporation, the global trading house, posts continued loan growth in the first half of the year on the back of an improvement in motorcycle sales and is also confident that the company’s loan growth for 2015 will exceed the target, thanks to its aggressive business expansion across the country in a drive to become an industry leader in five years.
Chief executive officer Wichit Phayuhanaveechai said during the first six months (January – June), Summit Capital continues to see steady growth both in terms of lending volume growing by 56 per cent and loan agreement numbers rising by 50 per cent compared with the same period last year as a result of the recovery of the local motorcycle market. The company has financed an average of 50,000 baht per customer and the motorcycles bought by 99 per cent of its customers are not above 250cc.
According to the Department of Land Transport, 908,100 new motorcycles were registered in the first half of the year, up 3 per cent from 877,746 units in the corresponding period last year. Honda remains the number one brand with a 7 per cent rise in sales. It is noted that new motorcycle brands, especially from China, have seen the fairly high combined growth rate of 22 per cent. On a regional basis, the Northeastern region and Bangkok and its vicinities still have the highest numbers of new registered motorcycles with the growth rate of 26 per cent and 24 per cent respectively.
The company expects its loan growth to increase by more than 50 per cent compared with the figure in 2014 as the economic situation is likely to restore in the second half of the year, mainly driven by public investment, which will be a key driving force for boosting consumers’ purchasing power. That makes it believe that the overall motorcycle market could witness full-year growth of 3-5 per cent as much as many analysts expect, which will be good for the company’s loan growth.
Other positive factors behind the company’s growth include lower interest rates, making its credit cost decline, and the aggressive business plan in expanding its service network in different regions which has made relatively good progress, especially in the areas that have high demand for motorcycles. In the first six months of 2015, 19 per cent of its total loan growth came from the Northeastern region.
“In order to increase our footprint in the country, our employees who are the local people in different areas play a crucial role in reaching customers and over 1,000 motorcycle dealers. Their good understanding of what the local people want and their familiarity with them enable us to better serve their demands. In the past years, Summit Capital has given priority to approaching these groups of people while strengthening our mutual relationship. We have also adopted new innovative technologies to make every process of our works faster, more efficient and secure so as to support the future growth, starting with the minimization of exposure to bad debts with more effective screening and monitoring standards to the development of fast loan approval process in 30 minutes which is regarded as one of our major strengths. This helps Summit Capital enjoy steady growth in all regions in the past six months,” he said.
“We have also seen a changing trend of customers as they tend to have higher average income per month. At present, over 91 per cent of our customers earn more than 10,000 baht a month, which is a relatively high proportion compared with the previous years. Meanwhile, their occupations have also changed. From full-time employees, more of our customers are self-employed. This trend might be caused by the economic slowdown, prompting them to run their own businesses.”
With its cutting-edge technologies, including the screening and monitoring systems for customers who tend to cheat on their debt repayment and effective methods of debt collection, the company aims to control the non-performing loan rate at no more than 2 per cent by the end of this year.
For the rest of 2015, it plans to continue expanding its service network both in the Northeastern and Eastern regions, followed by the South and the North regions in 2016. The company expects its service network to cover all areas in the country by 2017. In addition, the new Summit Capital Credit Centre offering a comprehensive loan servicing solution is going to be launched next month as part of the company’s ambitious plan to become the leading motorcycle hire purchase provider with the no.1 share in five years.