Siam Commercial Bank (SCB) bucked the industry trend after its rejection rate for mortgage applications fell to 17% in the first half, with the bank’s current customers accounting for most of its housing loan borrowers during the period.
The bank’s improved credit scoring system, which came into effect late last year, also helped to lower its mortgage denial rate from 20% over the same period last year, said first executive vice-president Pikun Srimahunt.
Most applications during the six months to June were from the bank’s customers who have deposit accounts and use other financial products and services at SCB, so it was quite familiar with their financial status, she said.
The bank is keeping its stringent loan approval criteria amid the uneven economic recovery.
Alongkot Boonmasuk, secretary-general of the Housing Finance Association, recently said half of mortgage applications were rejected during the first six months of the year, up marginally from the first half of 2015.
The high loan denial rate reflected the deteriorating debt-servicing ability and waning purchasing power.
SCB’s new mortgages amounted to 60 billion baht in the first half, down from 63 billion baht over the same period last year, but still in line with its new loan growth target of 110 billion. The country’s third-largest lender by assets extended 120 billion baht in new mortgages last year.
There were 82,900 condo units available in the market as of May 23, and 85% of them were sold. Several projects are in the development process.
Property developers are generally upbeat about the next six months, with the confidence index during the second quarter improving to 65.4 compared with 64.4 in the first three months.
Even though the bank targeted its new mortgages this year will be lower than last year’s, SCB aimed to raise its mortgages outstanding to 600 billion baht at the end of this year from 570 billion at the end of 2015. Its total housing loans amounted to 596 billion baht at the end of June.
Mrs Pikun said the bank had set a single-digit percentage annual housing loan growth over the past few years in line with the economic situation and shifted its focus to asset quality rather than loan growth.
The bank’s mortgage non-performing loans stood at around 1.8-1.9% at the end of the second quarter and it aimed to maintain the level throughout this year.
SCB shares closed Friday on the Stock Exchange of Thailand at 160.50 baht, up 3.50 baht, in trade worth 1.05 billion baht.