Jacky Shen

This has encouraged an increasing number of financial institutions to attempt to grab a piece of the nation's NT$300 billion (US$8.8 billion) personal loan market, Jacky Shen, HSBC's vice president of personal financial services, said at a press conference.

"According to our latest survey of people's borrowing habits, around 13 percent of the respondents have applied for small loans or cash-advance cards, up from 7 percent in 2000," Shen said.

He said this percentage is not especially high compared with other nations, but Taiwanese borrowers are becoming younger -- their average age is between 20 and 35, in contrast with the average age range of 20 to 50 years in the rest of the world.

In a survey conducted by the TVBS Poll Center among 7,644 people in June, around 73 percent of respondents said they are most concerned about interest rates when choosing a loan, followed by the methods for making repayments (24.8 percent) and application procedures (24.4 percent).

The top three concerns for choosing cash-advance cards are the same, according to the survey.

But marked differences were found to exist between the motives behind taking out a personal loan and applying for a cash card, Shen said.

"Small loans are mainly used to clear applicants' credit card debts and housing or car loans, or to facilitate their wealth management.An increasing number of people are integrating their debts through one financial tool," he said.

The circulation of cash cards, however, has been evolving in a similar way to that of credit cards, which have become prevalent products in the market.

The survey showed that 21 percent of respondents applied for cash cards because of pressure from their friends, while 19.4 percent they applied to prepare for a rainy day.

"It's worth noting that 8.6 percent said they were motivated by free gifts, a common practice among card issuers to lure applications.This has led to a high ratio of idle cards, increasing costs on the part of banks," Shen said.

Consumers were found to be generally aware that financial institutions charge additional fees disguised under different names, such as handling fees, account management fees or credit insurance, and 64.7 percent of respondents said that this practice was unreasonable.

Shen said the costs involved in granting loans include interest rates and processing fees.When banks boast extremely low interest rates to borrowers, he said, consumers should determine whether any hidden or added fees are included in their loan packages.

"Many of the poll respondents said they were not even aware that their banks were charging them handling or service fees," Jacky Shen, HSBC vice president for marketing, said yesterday.
...
"The market is obviously looking for a product that will meet their requirements," Shen said."This is what our 'All New Personal Loan' is about."

The HSBC personal loan program provides consumers with credit facilities of up to NT$2 million at a "super low" rate of 3.99 percent during the first six months.From the seventh month onward, the loan will carry an 11 percent interest rate.

There are also no extra fees, Shen continued.

"This product will redefine Taiwan's extremely competitive personal loan market and fully demonstrate HSBC's strong aspiration to take a large stake in Taiwan's NT$300 billion personal loan market," he added.

In addition to offering low rates, zero-fees, and high credit lines, the HSBC product was also available to a larger group of people.Applicants must be employed for at least a year and have a monthly income exceeding NT$25,000, said Shen.
...
Earlier this week, HSBC also launched the "Almighty Mortgage," a unique mortgage product that provided its customers with interest saving, investment flexibility, and comprehensive protection in one account, Shen said.

The mortgage product, which carries a 1.99 percent interest rate on its first year, is the first product of its kind that offers comprehensive financial solutions to homeowners, the executive said.

"It combines the advantages of offset mortgages and revolving loans along with insurance coverage for the borrower - satisfying customers' needs for interest saving, investment, and protection at the same time," he continued.

To better understand customers' true needs and preferences, the bank recently conducted a survey.The study showed that borrowers wanted banks to provide them with some form of coverage from accidents that could prevent them from paying their mortgages.

The "Almighty Mortgage" was the result of this finding, Shen said.