Mar. 2--Eastern Commercial Leasing will maintain its current interest rates to help compensate for rising credit risk, according to chief executive Danucha Verapong.

This despite the fact that funding costs have fallen with interest rate cuts by the Bank of Thailand and commercial banks.

ECL currently charges rates of 4-5 percent per year for its auto hire-purchase loans. About 60 percent of the company's funding comes from bank loans, with the rest from equity.

Mr Danucha said the company aimed to expand its loan portfolio by 500-600 million baht this year from its loan base of 1.2 billion baht at the end of 2008.

"New loan growth and the decline in funding costs will help lift margins this year. We expect better results this year [compared with 2008], but net profits might not improve significantly considering the weak economy," he said.

ECL reported 2008 profits of 29.77 million baht last year compared with losses of 8.83 million in 2007.

Interest from hire-purchase loans rose 3.48 percent last year to 107.48 million baht. The company booked other income of 39.9 million baht in 2008, up 57.58 percent from the year before, including fines on receivables in default and recovery gains on bad loans. Bad loans and doubtful accounts last year stood at 7.72 million baht, down 75.74 percent from the previous year. ECL set aside new provisions of 2.75 million baht for doubtful accounts in 2008, down from 8.49 million the previous year.

He said the company aimed to maintain non-performing loans at current levels of 3 percent of total loans. ECL was also increasing its focus on niche markets, such as used cars, Japanese-brand sedans and pickup trucks, commercial vehicles, boats and high-end motorcycles.

Mr Danucha said ECL would also explore opportunities to acquire new assets from other lenders.

"We are interested in possibly purchasing good quality auto assets in Bangkok and the Eastern provinces. We believe an acquisition can come with discounts of around 10 percent," he said.

Shares of ECL closed on Friday at 0.40 baht, up one satang, in trade worth 62,000 baht.

The company announced last week that it would pay a final dividend of four satang per share on May 13, with the share register closed on April 28. ECL paid an interim dividend of two satang last September, bringing the total to six satang per share, or 82.63 percent of net profit. ECL will hold its general shareholders' meeting on April 17, with the share register to attend closing on March 23.

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