TMB Expects Low and Manageable Impact Regarding the Captive Financing to “Chevrolet”

TMB Bank Public Company Limited (TMB) has made a clarification after General Motors (GM) announced to cease selling Chevrolet vehicles in Thailand by the end of 2020, and the bank has received the enquiries relating to the potential impact from this circumstance as Thanachart Bank Public Company Limited (TBANK), a subsidiary of TMB, has provided Captive Financing to Chevrolet (Thailand)’s affiliated companies and dealers.

 

TMB has asserted that based on the data as of 21 February 2020, TBANK’s outstanding loans granted to Chevrolet’s affiliated companies and dealers were relatively low in terms of percentage to total loans. The details are as follows:

1) The outstanding balance of term loans to Chevrolet dealers was only THB23 million or accounted for 0.002% of the total loans (consolidated basis), with collaterals covering this amount.

2) The outstanding balance of Floor Plan loans or Inventory Financing, which is a credit line for dealers to purchase car inventories for showroom display and for sale, was approximately THB469 million or accounted for 0.03% of the total loan (consolidated basis). The outstanding of Floor Plan loans have been decreasing. This was because General Motors arranged a promotional campaign before ceasing the business and as a result, dealers, therefore, could rapidly sell their vehicle stocks and TBANK could reduce the outstanding loans. We believe that the dealers’ vehicle stocks would be dispelled eventually.

Moreover, TBANK has already taken immediate action by reconsidering the credit line of floor plan financing for Chevrolet dealers based on their needs and closely monitoring the credit quality of both dealer partners and retail customers. With Chevrolet’s commitment to further support its existing dealers and authorized service outlets in Thailand to continue after-sales service to Chevrolet customers, TMB and TBANK estimated that the possible impact would be relatively low and manageable.

 

Asset quality has been one of the Bank’s priorities and TMB has continued to monitor on asset quality closely. NPL ratio remained low at 2.35% as of the end of 2019 when compared to the average of NPL ratio in the banking industry. The capital base was also well-maintained with capital adequacy ratio (CAR) and Tier 1 ratio at 18.9% and 14.6% respectively.