Thai Billionaire Now Bets on Lending Growth at Home, Not Abroad

By Anuchit Nguyen
June 24, 2020, 5:00 AM GMT+7

  • Muangthai Capital to focus on farmers, construction workers
  • Thai lender expects 20% profit growth on rebound in demand

Chuchat Petaumpai Photographer: Brent Lewin/Bloomberg

Billionaire Chuchat Petaumpai was mapping out ways to expand his consumer-finance empire beyond Thailand when the coronavirus shattered his international aspirations.

His Muangthai Capital Pcl has since suspended its overseas plans to focus solely on bolstering business in the domestic market. Despite a “challenging” economy, the country’s biggest consumer-loan firm will expand its branch network, targeting profit growth of at least 20% this year, Chuchat said in an interview Tuesday.

“The ongoing crisis has really humbled our international ambitions,” said the 67-year-old co-founder and chairman of the executive committee. “Our best strategy is to be more prudent and concentrate on our home market, where we are at the top.”

Nearby Vietnam, Myanmar and Cambodia were the markets Muangthai had explored, Chuchat said.

Chuchat, his wife and son have a net worth of $2.5 billion, mainly from their stake in Muangthai, according the Bloomberg Billionaires Index. The company’s shares have declined 17% this year, compared with a 14% slide in the Thai benchmark stock index.

Some of Thailand’s richest people, including Charoen Sirivadhanabhakdi, Dhanin Chearavanont and Sarath Ratanavadi, have accelerated overseas investments in recent years as Southeast Asia’s second-biggest economy slowed amid an aging population. The nation now faces its deepest contraction in more than two decades, with the Covid-19 pandemic hammering tourism and driving up unemployment.

The Bank of Thailand ordered last week all lenders to cut interest-rate ceilings on their loans. That includes Muangthai, which specializes in low-income borrowers. Chuchat said his firm’s earnings won’t be affected much because it charges borrowers “much lower” rates than the new central-bank rules require.

“Asset quality is likely weakening, but should still be manageable,” said Thaninee Satirareungchai, an analyst who covers Muangthai at DBS Vickers Securities (Thailand) Co. The company should see a rebound in the second half of the year, buoyed by branch expansion and a pickup in consumer-loan demand, she said.

The start of the rainy season has spurred loan demand from farmers and construction workers, which comprise about 90% of Muangthai customers, according to Chuchat. That, along with easing travel restrictions, will help the company achieve its earnings-growth estimate, he said.

Chuchat created his fortune by tapping into an ignored market -- millions of Thais who had no credit histories as required by commercial banks. The firm’s average loan size is about 15,000 baht ($484), with the most common collateral being personal motorcycles.

The company’s first branches in the early 1990s were in northern Thailand, before it expanded south, including in Bangkok. The firm now has more than 4,000 offices nationwide.

Here are more details from the interview:

  • Sees increase in loan applications from farmers as arrival of rainy season spurs need for cash to pay for seeds, fertilizer and field preparations
  • Government’s plan to reopen schools in July prompts parents to seek loans for their children’s new clothes, stationary and school fees
  • Second-quarter loan growth missed target because of business lockdowns and government’s cash handouts, which reduced need for low-income earners to borrow.