Wing Lung Bank, a Hong Kong-based lender and subsidiary of China Merchants Bank, is seeking to double or triple its personal unsecured loan portfolio to achieve better interest income returns.
In order to reach its goals, the lender has also let off its debt-servicing ratio to 70% from 50%, as against industry standard of 50%-60%.
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The increased debt-servicing ratio will allow the bank to lend more money for all forms of debt, mortgages, credit card loans and others.
Speaking at a conference, Wing Lung Bank retail banking head and assistant general manager Derek Chung were quoted by South China Morning Post as saying that it is quite hard for increased unsecured lending volume to fill in the gap from the loss of mortgage lending.
Interest rate on personal loans is higher than that of mortgage loans. The lender’s annual mortgage lending rate is 2.15%, while personal lending rate is 2.66%, which again depends on size of loan and repayment period.
Chung said the bank wanted to see personal lending grow to 10% of its total loan portfolio, without disclosing the present contribution or the time frame being looked at.
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By GlobalDataAccording to Chung, Wing Lung wanted to keep its net credit-loss ratio below the market standard of about 3%.
