Walking Our Way to Sustainability
Sustainability Strategy: Targets and 2018 Sustainability Performance & SDGs
As a leading Microfinance service provider, with the sustainability commitment of being a “Responsible Finance”, our responsibility is not limited to reduce the financial inequality in Thailand but also to contribute in developing the industry’s market conduct to be transparent and fair for every group of our stakeholders for sustainable mutual benefits with ethics for transparency and fairness.
The Company has set the sustainability direction under the three pillars “Happy Economy, Happy Social and Happy Environment”
|Emission Enemy||Our target is to have 100% accomplished in Forest-Friendly products with FSC certified and green certified papers. The practice scope shall extend to cover all branches and all type of papers we are consuming||All toiletry paper specification to be green label and FSC certified only|
The reduction is intended to be based on energy consumption, which allows the company to adopt HQ office energy consumption reduction programs. The energy consumption reduction per user is relevant as a tool to assume the level of consumption. With the basic program, we managed to achieve the energy consumption reduction of 0.89 KW/user/day or equivalent to 0.63 KG CO2 of emission/user/day. Our target is to maintain this amount as nearly 100% of energy source of use are from fixed assets with the more users.
|In 2018, we managed to maintain the energy consumption reduction of 0.89 KW/user/day or equivalent to 0.63 KG CO2 of emission/user/day.||
To become an efficient office, MTC is not starting from ground zero. Yet, this year the new strategy has a huge scaling up of our carbon reduction footprint practices.
However, during 2017-2020, we are maintaining our focus on the reduction of paper use with technology, since it causes high environmental impacts in its production process. Our target remains, as stated in our SD report last year, that our paper consumption index will be reduced to 15.2 papers/employee/day
|Paper usage 16.10/employee/day, down from 17.5/employee/day last year.|
|Earning Employee life-time Commitment||Our program to enhance our employee commitments are to improve the communications within the organization, to improve employee’s wellbeing and safety, to support their development in knowledge and skill and to encourage diversity. Some target to be used as an index for monitoring the development in gaining employee’s commitments are to have more 4/5 of all aspects of employee’s satisfaction towards the working environment, to reduce employee turnover rate to 10% and 1% of accident cases, to have the average training hour per employee of not less than 8 hours.||This year, the employee’s satisfaction survey revealed a lower-than-the target score for work life balance aspect. Our turnover rate is 17%, where 80% of employees who departed were those with working duration under 6 months with us. The accidents (including in and out of duty) is 3.5%. However, the training hour per employee is 9.19 hours, achieved the target.|
|Strong Supporting Community||
Our CSR program target has been committed to build strong communities where our people (employee and customer) are living in. Their better quality of life will eventually help growing our business sustainability, in term of growth and asset quality.
In targets for the 3 initiatives are;
Education: 3 development centers were contributed to 3 communities. Hence, as of end of 2018, total number of children taken care under total 12 development centers are 415.
Public Healthcare: Total 1,477,550 cc of blood from our employee donors are donated to public via Thai Red Cross, or accounting of 64% of our employees.
Religion: 4 hosting of Katin ceremonies were accomplished to build relationship among community’s people and us, as well as to preserve the national’s religious culture. Total charity amount is THB 7,146,725.
Growth of Financial Inclusion
New Customer Acquired: 30% growth of number of active customers.
Old Customer Returned: 70% of customer are retained customers.
Trusted Customer Stayed: Trust is not built overnight and the measure of its strength is time. We are aiming to set up an index to measure the life-time duration relationship
New Customer Acquired: 286,954 number of new active customers.
Old Customer Returned: 71.46% of customer are retained customers.
|Improvement of Industry’s integrity||Our target on this challenge is to uplift the microfinance industry and develop fair and transparent market conducts by cooperating among the microfinancial service providers and regulatory supervisors.||Licenses to operate
To become a “Fraud Free” organization is one of the most difficult commitment we give to public, but its importance is as important to us as to our stakeholders. Our risk management function, together with the risk management committee are keeping an eye closely on monitoring the fraud and corruption cases and they are fully unacceptable conducts for us. In the meantime, all necessary processes, tools and policies are implemented to prevent and detect such cases on the best effort basis.
Governance and Risk Management
The stakeholders of the company are groups that are directly affected, indirectly affected and unaffected by the business operations of the company. The stakeholders are categorized into 6 groups (appendix: Stakeholder Engagement & Communication). The interes issues can be altered from time to time along with the change in the business environment and the change in risks. The company will regularly revise the issue accordingly. For our sustainability development, we are encouraged to develop more and better quality communication channels to engage all group of stakeholders sufficiently, effectively and timely.
“Ethics, Transparency and Accountability of the Board’s structure”
Managements believes that the key success of company’s proper management strategies, in which will lead the company to a sustainableg rowth, are ethics, transparency and accountability value, in the other word, a good corporate governance. In the year 2018, the solid foundation and business conduct practices are continued as commitments to our stakeholders. The CG policy and related policies are fully disclosed in company’s website.
Our Board of Directors is consisting of five independent directors out of scan and the Chairman of the Board of Directors is an independent director. Three independent directors are audit committees, who oversight of the financial reporting process, the audit process, the system of internal controls and compliance with laws and regulations with prudence.
The annual self-assessment carried out for the board of directors, individual committees as well as individual directors. The results are disclosed to public (see Corporate Governance section in the Annual Report Form 56-2).
Skill Matrix of Board of Directors
The skill self-assessment of the member of Board of Directors was used as a tool to evaluate the board’s composition. Our board skill matrix strengthens an organization’s overall governance practices by identifying the current skills, knowledge, experience and capabilities of current board members. The matrix helps identifying areas for individual and overall board skills development which can be enhanced through additional education and training. It also helps the recruitment of a new board member that possesses a specific skill set to improve the board’s composition. At the moment, in the missing areas, the company may consider professionals when appropriate.
Company’s aim is to reach the World Bank’s standard of code of conduct and to become a dedicated responsible microfinance in Thailand. For the past years, the company has developed and complied with the code of conduct which is governing the foundation of how the company conducts business towards all stakeholders in accordance with the highest standards. This year, the company has further developments in corporate governance by ensuring that its ethical, social and environmental strategies are integrated. The Whistleblowing Policy and AML/CFT Policy were added to further improve the Anti-Corruption policy as well as engaging more stakeholders into the implementation of the policy.
MTC’s policies, codes and procedures regarding sustainability are reviewed on annual basis by the Board of Directors. In 2018, the board updated the Code of Conducts and Anti-corruption policies in order to meet the Collective Action Against Corruption (CAC)’s compliance.
|Whistleblowing||Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT)|
|The whistleblowing policy enables stakeholders to raise concerns and to disclose information which they believe shows wrongdoings. The policy aims to protect the whistleblowers.||To ensure the compliance with the laws on anti-money laundering (AML) and international criteria on anti-money laundering and counter financing of terrorism (AML/CFT), the Board of Directors has established the AML/CFT Policy, the Know Your Customer (KYC) Policy, the risk management policy and reporting practices against customer’s money laundering activities.|
Muangthai Capital has focused on risk management which is considered as one of the principle culture of the organization. In order to ensure that the operations of the company are in accordance with the principles of good corporate governance, creating a sustainable business, creating creditability and building confidence to investors. The company, this year, therefore, has newly established a Risk Management and Legal department to support the Risk Committee to formulate risk management policy, follow up the implementation of the risk management plan, assess the adequacy of risk management plan and report significant risks to the board of directors.
Corporate Risk Culture
Although the values of the company are to be aggressive in business growth strategy, however, we are highly conservative in risk management. Such values are cultivated to employees at all levels that it becomes our corporate culture, via the 360 degree internal communication channels, to share the experience of risk management throughout the organization as well as to raise awareness about risks, and training and development programs for directors and executives.
2018 Key Risks, Challenges and Opportunities
|Regulatory and Compliance Risk||In 2018, the Company was awared of amovement in the industry’s regulatory environment, as a consequence, the licenses to operate had been altered to affect the whole industry’s operations in a better way, especially for the market conduct development.||Board approved an establishment of a new Department of Risk Management and Legal to replace a risk management working group function the board resolved in years earlier. The Risk Management and Legal Department is reporting to the Managements and Risk Management Committee on a quarterly basis to mitigate the risks relevant to regulatory environmental changes. As a result, we have also adding the regulatory authority into one of our key stakeholders.|
|Fraud and Corruption Risk||
To become a “Fraud Free” organzation is one of the most difficult commitment we give to public, but its importance is as important to us as to our stakholdersas it is a key success factor to deliver what customer’s needs, which is a quick cash via our fully decentralized operation.
Our risk management function, together with the risk management committee are keeping an eye closely on monitoring the fraud and corruption cases and they are fully unacceptable conducts for us. In the meantime,all necessary processes, tools and policies are implemented to prevent and detect such cases on the best effort basis.
The whistleblowing policy was newly established and approved by the Board during this year. The complaints and reports received through whistleblowing channel/focal person are reported directly to the respective governing body which is the audit committee. During 2018, the audit committee was reported once about the general situation of the whistleblowing channel activities.
The Board approved that policy should be reviewed by an independent external expertise for an improvement and revision to ensure that proper conducts are taken during a corruption risk-related activity and a confidentiality of the whistleblower. Prevention of money laundering and financial of terrorism Besides the AML/CFT policy, the prevention procedures and its risk management frameworks were approved by the Board and was implemented within the company during 2018. There is a mandatory course for all employees. It is also required that this issue shall be reported to the risk committee periodically, although the risk exposure is considered relatively low due to the nature of the business activities and the target group of customers.
|Sources and Costs of Funding||Due to the uncertainty of global macroeconomics, partly from the unsystematic risk regarding America First Policy, MTC considered that the impact could lead to higher cost of funding.||
With this matter, the organization chart will be restructured by separating a clearer role and responsibility of Treasury and Corporate Finance function, expecting to be effective in 2019. The financial risk, therefore, will be mitigated with our financial management strategy and closely monitored.
|Climate Change Risk||
probably indirect impact up to 70% of our portfolio which is involving customer from agriculture and construction sectors. Such risk could result in higher NPL and short-term funding ability of the company due to a sudden surge in demand for loan services
The company is well aware of the risk regarding to the climate change which is increasingly important in all sectors. In 2018, the managements approved the Environmental Policy to encourage the internal task force mainly relating to the resource consumption within the company, includingthe green building which is still the construction process.
Statistics of Board of Directors Structure
Member of the Board of Directors are non-executive: 71.43%
Member of the Board of Directors are independent: 71.43%
The Chairman of the Board of Director is independent.
The Chairman of the Board of Director is not The Chairman of the Executive Committee.
Member of the Board of Directors are female: 42.86%
Supply Chain Management for Business Sustainability
The company operates as a non-bank financial institution providing retail loan to retail customers (Microfinance) with a sustainable development objective is to be a “Responsible Microfinance”. In this case, it refers to the responsibility for all stakeholders of the company, which are those related party within our supply chain.
The current supply chain of the company is not yet complicated, where there are not several parties involved with a main focus and prioritize on the needs of "customers". The related parties determined in the supply chain model for the sustainability of the company, therefore, reflecting the best collaboration in order to respond to the needs of customers.
Supply Chain of Muangthai Capital PCL
- The company operates as a retail loan provider (Microfinance) under the supervision of the Bank of Thailand through a Personal Loan business license under non-financial supervision and the Nano Finance provider license.
- The company has defined the business ethics towards stakeholders in the Corporate Governance Policy and disclosed on the company's website as well as in the company's Annual Report.
- The company has classified the list of important customers, in accordance to the credit issuing policy and guidance, and has set the maximum credit limitation per contract and per customer (Single Lending Limit) to restraint the concentration risk from default, in which resulted in 20,700 Baht credit on average per contract. In the default event, it will not significantly affect the company's overall performance.
- The company has established the core credit policy to be based on the asset value.
- The company has established the business partner/suppliers selection policy to ensure that the selection criterion and process are operated fairly and equally. The company also concerns about the supplier's reputation, integrity, profession and they shall be able to follow conditions and regulations, without resistance to environmental and labour laws. To build mutual business partnerships and business growth, the company supports tits partners to go against corruptions as well as working incorporation to achieve the sustainability goal.
- The company has guidelines to mitigate risks that may occur in the procurement process, therefore, it is included in the company's Anti-Corruption Policy and conducts internal audit on this particular process regularly.
- Our procurement practices take into account the social and environmental concerns. The example in which reflecting such policy is the current construction project of the new HQ. The new HQ building is going to be a truly Green building (LEED certified), because the company is considering the well-being, hygiene and safety of our employees, inhabitant, animals and plants, as well as the energy consumption and other environmental issues in long-run.
- The company well recognizes that the related parties within our supply chain are not only those impacted and benefited directly, but the surrounding communities around the company's branches, as well as the environment, are also considered important related party within our supply chain. The company, hence, initiated several CSR programs and has been operating the programs continuously for years. The objective of those CSR programs are to build stronger community, as we believe that the strong community is a strong fundamental to support quality of our customers, and ultimately resulted in lower NPL.
Please see the CSR project detail and performance in CSR News and Events
1. Growth of Financial Inclusion
The limitation and inequality to access to banking facilities and services in Thailand has been implanted deeply in our economic welfare problem. Despite the government’s attempt and the national strategic plan to resolve the financial inclusion problem, according to World Bank report in 2014, around 15.40% of Thailand population borrowed from financial institutions and millions people still do not have access to basic banking services. Our concerted efforts are being made to bring Microfinancial services to these unbanked individuals, in order to distribute financial accessibility with fair and transparent cost to fund to majority to them.
Offering sustainable products and services with responsibility to the needs, the satisfactions and respecting the rights of customers.
The main customers of Muangthai Capital are customers with uncertain incomes, which has a large proportion of the entire population of Thailand, therefore, unable to access financial resources from normal financial institutions. The company, hence, offers an unconventional microfinance product as an alternative for retail customers, which is vehicle title loan (motorcycle, car, agricultural vehicle) with fair and transparent interest rate via branch expansion. The total number of branch as of end of 2018 is 3,297 branches and expected to reach 4,500 in 2020.
1. Customer’s Need
Understanding customer’s need is the key success to company’s sustainable growth.
|Management’s Approach to Customer’s Needs||How it matters||Sustainable Targets|
|Quick Cash||Decentralization & Fraud Management||Quick Cash|
|Technology Improving Efficiency||Deliver services per customer’s choice of preference||Technology Improving Efficiency|
|Sufficient Credit Line||Financial Inclusion||Sufficient Credit Line|
Assessment & Credit Line Extension
|Thailand’s financial inclusion enhanced||Asset-Based Credit
Assessment & Credit Line Extension
Although the cashless technology has aggressively disrupted the whole financial markets, our customer’s needs of cash and quick transaction, however, still remains. In order to deliver the customer’s needs of cash transaction, the company is required to properly implement the decentralization process with a strong internal control of fraud risk and the right technology for efficiency improvement.
Decentralization & Internal Control of Fraud
While the major directions are handed on by top managements, the business daily operations and decision-making responsibilities are delegated to middle and lower-level managers within the organization via our branch networking in the most efficient way.
With traditional manual controls, together with technology implementations, we have developed an effective internal control of fraud process. The fraud risk has been monitored closely by Risk Management department as well as internal audit department.
Technology Improving Efficiency
Our strategy is to start acquiring the financial technology in which appropriate and supportive to our main business operations in the right timing when it is not as costly and not risky. We believe that, rather being disrupted by the technology, it is helping increase in our efficiency, improving customer experiences and reducing operational and fraud risks.
- SAP Operation System
SAP, which is one of the most powerful and trustful operating system, has been implemented to allow the company to manage financial transactions and business activities in real-time across all branches. The financial risk, operational risk and fraud risk are ensured to be under control.
- Muangthai Capital 4.0 App
Muangthai Capital 4.0 application was launched in late 2017, comprising of 4 functions which are;
- Balance Checking
- Products & Services
- News and Updates
- Branch Location Search
It helps increasing customer experience, reducing fraud risk and improving operational efficiency.
- Cross-Bank Bill Payment
The cross-bank bill payment is under developing process for system integration. The technology allows customers to make repayment through PromptPay via any bank. It will provide a greater inconvenience to customers and a huge developed in internal operational efficiency.
Sufficient Credit Line
Financial Inclusion Expansion
In order to improve the access to inclusive finance, that is where we are playing an important role with our loan portfolio expansion growth that allowing majority of non-financial inclusion to gain an opportunity to access funding with fair interest rate. Last year, our portion in microfinance loan might not be considered significant, comparing to the national GDP. However, this year, the regulators started to see its potential and realized how much impact to the national economy and social it could be. We, therefore, are grateful to be supervised by the Bank of Thailand, yet, our main intention remains to provide our best effort to expand the accessibility for highest coverage in Thailand and to be truly approachable for all group of Thai people, especially the informal income and unbanked people.
For the past 5 years, the number of our branches has been rising in relation to the size of loan portfolio, in which we are using as an indicator for financial inclusion. However, our consideration is not only limited to the accessibility of financial inclusion, the quality of loan is another element we involve in the controlling and improving, meaning that the growth of lending shall be contributed to good customers for their sustained and self-sufficient livelihood with responsibility, resulting in better quality of loan and lower rate of default probability and NPL.
Asset-Based Credit Assessment and Credit Line Extension
MTC’s operation is generally associated with lending against nontraditional collaterals such as vehicle titles and land deeds. The credit assessment process is direct and simple. The credit line is granted based on value of the assets, with less considering other kind of credit worthiness. It, hence, is applicable to all customers with required documents and assets, regardless of their incomes, gender, ages, races, religions and careers.
Throughout the years, we have adopted new loan products to help credit line extension for our customers to fulfill the customers’ need when their wealth is growing. With very limited source of funding back two decades ago, we only provided loan against motorcycle title. After our IPO in 2014, we added car title loan, land deed loan, and unsecured loans, hence extending the credit line for greater needs of our customer’s credit line.
The average credit line of company’s portfolio is shown per below;
Loan Portfolio Profile
- 2.3 Million active contracts
- 1.5 million of active customers (lives impacted)
- THB 48 billion of portfolio size (financial inclusion)
- Consistent Plain Vanilla Product Mix
Fair and Transparent Interest Rate
Pushing the Industry to the New Regulatory Body
New regulation for microfinance industry establishment, especially the vehicle title loan product, was partially contributed by the association and the company, incorporating with the Bank of Thailand and the Ministry of Finance, in order to govern and improve a better transparent and fair and proper market conducts to microfinance institutions (non-bank) and customers.
This year, in collaboration with the Vehicle Title Loan Trade Association (“VTLA”), we are a part playing an important role in driving BOT’s supervision process by sharing the relevant information for the best interest of both lenders and borrowers, since we are the market leader, having the largest market share as well as number of customers; we have the deepest understanding our customer’s requirements and behaviors. It is, eventually, resulting in the revision of Personal Loan’s regulation to cover vehicle title loan with interest rate capped at 28% and proper market conducts
Set New Mean of Market Interest Rate
The market rate has been brought down, whilst our interest rate and fee charges are still at the lowest in the market.
This year, with our further contribution incorporating with the regulators such as BOT and Ministry of Finance, the interest rate has been recently capped at 28% under the Personal Loan’s regulations, with clearer instructions on market conducts, helping the overall industry improved with the fairness and transparency. Although, the BOT allows the interest rate charge to be up to 28%, however, we prefer to maintain our interest rate charge as low as usual for our customers, as a reward for their retention of lowest NPL.
Service Excellence Policy & Standardization
We adopt standardization, especially focusing on the Service Excellence Policy (further clarified in Customer Engagement & Fair Treatment section), to create uniform business processes, such as service standards, loan issuing, asset valuation, debt collection, etc. across branches. The expected results are processes that consistently meet our cost and performance objectives using a well-defined practice. Standardization, thus, reduces the risk of failure in both operationally (human error, fraud, etc.) and financially (overvaluation of collateral asset, credit risk, etc.) Advantages from standardization, beyond direct cost and quality improvements, include;
- The process becomes more reliable; variations in quality shrink.
- Comparing the performance between different units of an organization becomes easier.
- Process standardization is an important prerequisite for the standardization of IT systems.
- The loan approval standardization has helped less discrimination/favourism in the loan approving process, resulting in a better and a fair chance for customers to access the funding.
Morality Vs. KPIs Mechanisms
As we have put our customer’s treatment as the first priority, as well as the hard works and efforts of our employees, the employee’s mechanisms have been designed in the way to benefit both stakeholders.
KPI: Good Asset Quality
Morality Mechanism: Instead of focusing either on the loan growth or the amount of debt collected, the number of customer acquired and the low NPL are our main target to define the success of our employees’ efforts and to secure customer’s safety and privacy. It reflects in such a good asset quality shown today. Without this mechanism, the customer might be led into entering into false financial decision (too big ticket size) or risking their safety and privacy in the default events.
KPI: Service Excellence
Morality Mechanism: The better service we have been providing to our customers changing the whole face of competition in the market, reducing the violence and inequality treatment to customers. From our history, it is found that approximately 70% of customers are retained customers. We have been using such rate as one our KPI to indicate the quality of service our employees are providing. With any rate lower than 70%, meaning that there is a room for service quality to be improved. This year, the customer retention rate is 70%.
2. Customer’s Satisfaction
Customer Engagement Program
Clear and transparent customer engagement process is an essential component of providing excellence services to our customers, maintaining their trust and loyalty, and empowering them to make the right financial decisions, in which being a secret recipe to keep our NPL low, as well as, maintaining our competency in competitiveness.
Our customer engagement strategy had been mainly focusing on the Service Excellence for the past years. A set of service standards that were created in accordance to the industry best practices and regulations had been monitored continuously for efficiency improvement across our branch networks. Our customer engagement strategy, therefore, had been executed via offline (thanking customer form) and online social network channels (FB Page: “เมืองไทย แคปปิตอล: Muangthai Capital” review: 4.2/5 from 336 reviews as of 31 December 2018).
This year, however, to enhance the sustainable customer empowering, we adopted a new process to assess our customer satisfaction in several aspects to get a greater insight into true customer’s needs and satisfactions towards our products and services. The customer engagement tools are mainly to establish public surveys on our webpage and other online channels for their satisfaction assessment, besides the service, on other areas we are interested in, such as, the demand for each products and service, the efficiency of marketing tools.
2018 Areas of Interest
- Identification of customer needs about products and services
- Effective customer acquisition channels
- Efficiency of company’s website to penetrate target group
Identification of company’s competency
After the analysis and conclusion of the results, several strategies, which are relating to enhance the customer experience, have been initiated and implemented.
Customer’s Satisfaction Improvement Strategies
As a result, our commitments to improve customer’s satisfaction reflected in our 2019 business strategies;
- Operation: Shift in product segmentation Loan growth, Better Yield
- Risk Management: New process to control risk Risk profile maintained
- Marketing: Shift to online marketing strategy More efficient, lower cost
- HR Development: Intensive in Service Training Program Employee empowered
We clearly cannot control the customers but we can help inform and guide consumers in a way that benefits the company, consumer, society and the planet. Because customers tend to trust their family and friends more than a corporate PR message, the Service Excellence program, therefore, remains what we are embracing but with more works to cover other aspects to become a better industry’s leader.
3. Customer’s Right
- Appropriate Financial Decision
- Fair Interest Rate and Fee
- Transparent Communication
- Respectful Treatment
- Customer Feedbacks Management
Credit Line Limitation and Loan-to-Value Policy
In order to prevent over-lending risk which leading to NPL, the credit line per person and per contract are established, incorporating with the loan-to-value of the assets. The assets, however, are evaluated to reflect the true market prices via our own auction houses (6). The market prices are updated twice on SAP system, in which sharing the most updated information among our branch network.
Max. credit line per contract
Max. credit line per customer
Fair Interest Rate and Fee
We realize that we are a component playing a fundamental role in enhancing financial accessibility of Thailand’s population. To achieve that, we are aiming to make financial resources available for the real economy, especially to the grass root at the bottom of the economy’s pyramid, and to offer microfinance products and services that serve, rather than harm, the public interest per social’s expectation. It reflects in our interest rate yields of approximately 23%, which is lower than the average market rate.
To win customer trust and maintain their loyalty, the transparency in communication to customers is the heart. This transparency reflects clearly in our revenue structure as fair and simple as possible. Despite the level of financial literacy, the customers are having. It is our responsibility they must understand all terms and conditions they are binding into.
It is our policy to display a clear instruction of interest rate and all fees associating with the business operations that all employees and customers required to understand.
Retaining existing customers is critical to the sustainable success of microfinance business. Our customer retention rate is approximately 70%, determining the importance of our retained customers and is set to be one of our employee’s KPI.
Customer Feedbacks on Multi-Channels
We have provided several interactive channels for the customers to communicate their feedbacks with us, both off-line and on-line platforms, which including;
(Customer Thanking Form)
2. Improving Industry’s Integrity
Due to the scaled-up and more commercialized, together with the necessity of the microfinance industry in this country, as a leader, we realized that this very fragmented industry shall be reshaped and being supervised by an authority for an improvement in its standard market conducts. In other words, the growth of financial accessibility, not only have to be balanced with the risks, it also has to be balanced with our business morality as well as standard market conducts.
1. Partnership and Collaboration
Contribution in new regulatory body for microfinance industry, diminishing of regulatory risk and establishing standardized transparent and fair market conducts As a result, early of this year, we approached the Bank of Thailand as well as gathered a Vehicle Title Loan Trade Association (“VTLA”) with another 30 companies in which vary in size and being active across regions in Thailand. With a significant collaboration between the Vehicle Title Loan Trade Association and the Bank of Thailand, in late September 2018, it was announced that the Personal Loan License issued by the Bank of Thailand is extended to secure loan product, in which including the vehicle title loan such as motorcycle, car and agricultural vehicle. With this essential move, we believe that the market conducts in this whole industry will be overseen and supervised by the Bank of Thailand and expecting that the industry will be considered as legitimate as the banking sector in the near time.
2. Improving Fair Interest and Fee Structure
In respect of building industry’s integrity, we are the leader to initiate the use of effective interest rate and prepayment fee termination since May 2018, in which turning the Microfinance industry to mitigate the country’s financial inclusion problem sustainably since it provides the flexibility to customer to break the loan cycles, hence enhancing the asset quality overall, as reflected in the dropping of NPL in the fourth quarter.
MTC’s operating under licenses and regulations
Personal Loan License
Under BOT’s supervisory since 2006, revised in 2018 to include vehicle title loans, with interest rate capped at 28% p.a.
Nano Finance License
Under BOT’s supervisory since 2015 with interest rate capped at 36% p.a.
Civil and Commercial Code
Section Code: 0650-0656 Excessive Interest Rate Prohibition Act B.E. 2560
Vehicle Title Loan Trade Association Annual Meeting in September 2018
Happy Social Responsible
1. Implanting Employee Commitment
Committed employees bring the achievement of sustainability goal to the organization through their determination, proactive support, high productivity and awareness of quality. But because our business is human driven, the strong discipline culture is taken as a key success factor to maintain our asset quality, which is a factor to business sustainable success, therefore, it is rather a challenge to retain newly employed employees and encourage them to adapt to the corporate culture. In 2018, our turnover rate is 17%, where 11% is from those employment durations under 6 months.
The business grow will never happen without our employee commitments. To build up such commitments, the Company must create employees with loyalty, happiness and intellects and diversity within the organization. However, it is must be based on the principle of human rights of the employees, so that they sustainably work happily and efficiently.
1. Loyal Employee
Technology Links Us All
Since we are having more than 3,279 branches with over 7,660 employees across country, the technology is implemented to connect peer-to-peer, top-down and bottom-up.
- MTC University
Sustained use of “MTC University” internal platform; over 7,660+ users for official communication among employees and managements
- MTC Forum
Open use of “MTC Forum” platform as the corporate social networking platform; for knowledge sharing, Q&A, comments, complaints, requests and whistleblows.
Fair and Transparent Assessment Programs
- Employee Satisfaction Assessment
This year we started to conduct a blind employee satisfaction survey via the internal portal. Since the company’s employee turnover rate is high during the first 3 year of employment, the survey is, hence, performed heavily weighting on this group of employee. Their feedbacks are helping us better understand and integrate sustainability across our business.
- 360-Degree Assessment
Because “teamwork” is a core essential in our culture and values, the emphasis, hence, has shifted towards 360-degree assessment process. For this reason, managements support this use of multiple-input performance for formal appraisal for employee and their developmental purposes. Moreover, the 360-degree assessment process is conducted in association between HR Department and Internal Audit Department as a tool for misconduct reporting channel. The process is normally performed in the way to maintain its independence.
- Exit Interview Process
In 2018, the company started to collect feedbacks from departing employees in order to gain insights into all aspects of the working environment in which contributing to high turnover rate, especially those with under 3-year of employment. Total Employee Turnover Rate 17.21%, in which mostly are the newly employed employees.
2. Happy Employee
Due to MTC’s safety policy for employees, the helmets are provided to all front office who required commuting by motorcycles during their operations.
- Free accommodation for every employee
To enhance employee’s quality of life, the accommodation is offered to all employees at free charge. The front officers are allowed to stay at the second/third floor of the branch, while the HQ officers are allowed to stay in company’s dormitory located opposite the HQ in Bangplad District, Bangkok.
- - Sport Events in 2018
MTC promoted long-run health benefit of employees by investing in sport events which have been arranged weekly and yearly throughout the year. Moreover, MTC also supports social healthcare by being a main sponsorship in the “Mini Marathon Bangkok Run in the City 2018” on 2 December, 2018 and providing opportunities to 100 employees to attend the running event.
3. Intellectual Employee
In order to retain our talents, the company reckons that one of the most challenge for us is to create the opportunities and incentives that maximize employee contributions to corporate performance, to help the company benefits most from our crews. It is, therefore, our responsibility to provide our people the growth and development in their careers through the training program.
Employee Orientation (8-12 hrs)
The orientation process in which we use to introduce the new employees to their new environment, corporate culture as well as the sense of “belonging” to the company.
Service Excellence; all level (8 hrs)
The Service Excellence training program is designed to focus on developing a culture of customer service excellence, which is the heart of our business competency, and provides employees with theories as well as critical skills at both the individual and organizational level.
Management Techniques; Management level (8 hrs)
Because our business operation is decentralized, the effective leadership is, therefore, a vital element of the success. The training will help management level to run their team efficiently, resulting in a greater productivity for the company.
Selective Training (8 hrs)
The selective training is allowed for individual employee to select any particular course or training per their preference and work related to meet individual personal interest and improve skills and knowledge
Scholarships; Management level
Scholarships are provided to employees to pursue higher education.
For the continuity of effective business operation, MTC ensures that senior managements and executive managements are on our succession planning program, with the following practices;
- Identifying the successors based on performance, potential and readiness of the persons.
- Designing the development program for the selected successors to enhance their knowledge and skills.
- Meeting requirements of the successors.
- Job rotation for successor preparations.
4. Diversity Organization
|10.93% of workforce constitute|
|40.49% of HQ constitute women||
|21.43% of management position constitute women|
|100% women returned after parental leaves in 2018|
|Employee Inclusion (localized and Rotation)||Training Indicator|
|Employees from 77 provinces across Thailand||
Invested in training program
Hours of training per employee
|3 employees with disabilities
2. Building strong communities
Without support, these valuable members of our community risk losing their independence, their dignity, and their health, and weakening the social overall, resulted in lower quality of people who, eventually, are our stakeholders. Supports can be simple – ranging from donation to community for general or specific purpose to providing children day care school, to take care of the children while parents are away to work. Our challenge is to become a center of the community, where people would think of us when they are facing a problem.
An investment in communities through CSR programs on the education, public health care and religion demonstrating how a corporate citizenship can create positive long-term impact towards our communities.
MTC has initiated a project to build new children development center under the name “Baan Mai Khong Noo” every year until present. The company had already built 9 children centers and this year, 3 more have been added, which are Baan Kongwa Children Development Center, located in Chiangmai, Sribanpot Children Development Center, located in Pattaloong and Nong Pakwan Children Development Center, located in Srakaew. Not only the physical building we have been providing, we also have set up a program to follow up to ensure that the facilities have been utilized per objective and efficiently by having appropriate amount of children under their cares. The number of children indicates the impact of the children development center towards its community, how many parents and households we can actually help in improving their quality of life.
In June 2018, the “Muangthai Blood Donation” program was held again. The employees were very responsive and supportive in this activity by incorporating in blood donation at the nearby hospitals and the provincial Red Cross across Thailand. This year, we were having totaled 4,925 blood donors (300 cc each) accounted for 1,477,500 cc blood donated, with 4,925 blood donors surpassing the past year.
A 271,200 cc (18.36%), B 520,500 cc (35.23%), O 564,300 cc (38.19%), AB 121,500 cc (8.22%)
The temple in each community remains the heart gathering nearby residence’s bonding. By organizing and hosting a regular Kathin ceremony on a yearly basis, rotating to different areas, we help in reservation of the traditions inherited and to maintain good relationships with people in the communities. This year, the collection was totaled THB 7,146,725, which was contributed to the following temples;
- Wat Nong Krang, Angthong Province amount THB 1,784,775.
- Baan Num Poo Temple, Chainat Province amount THB 1,787,220.
- Ampawanaram Temple, Roi Ed Province amount THB 1,785,910.
- Ta Ma Pring, Coomporn Province amount THB 1,788,820.
Contribution to sustainable development goals through community investment In the same event, the company has also provided THB 100,000 scholarships to each of four community schools.
Long-term reduction of carbon footprints
As a Microfinance Institution, our role in the general social is consisting of both direct and indirect impacts towards the environment. The direct environmental impacts that we consider range from emissions produced by our Headquarters and branch offices as well as transportation used by staff, where the indirect impacts include the greenhouse gas emissions related to our business operations. It is a challenge for us expand the scope to cover 100% of our operations which are spreading across Thailand and do not share 100% of the central procurement system.
We, hence, account for the environmental effects of mainly the building and facilities management including excess paper and energy consumption. The shift towards a low-carbon economy becomes our commitment since the establishment of our environmental policy in 2018.
1. Emission Enemy
This year we started the initiative regarding the forestry protection by revising the Purchasing Code of Conduct to concern more environmental friendly issue, which resulted in changing from normal toilet paper rolls to the FSC certified one. Our target is to change 100% of paper used within the organization to green label.
2. Energy Less
In 2018, another big important step moving towards the environmental sustainability is to take our employee into contributing to reduce environmental impact by establishing the Environmental Policy, in which encouraging employees to consume all natural resources with cares.
Earth Hour Program
This year, our environmental policy is published in the corporate website. We started the initiative for energy sustainable with an Everyday Earth Hour Program (HQ only), with an objective to reduce the electricity consumption. The saving of the energy eventually reduced GHE emissions, in which leading to reduction in demand for fossil fuel energy.
LEED Certified Green Building
As of end of 2018, the company has formed our networking spread across country of approximately 3,279 branches. They could possibly account for nearly 90% of our total CO2 emissions, it clearly makes sense to reduce the environmental footprint wherever possible. This comes to the newly construction of Headquarters project in Bangkok with LEED Certified Green Building to highlight the environmental improving that we can achieve in our largest property.
In the year 2018, the company was in the process of planning and designing the new Headquarters building, with the intention to details of environmental sustainability strategy in accordance with international standards.
The green buildings certified by LEED use less energy and fewer resources. Moreover, the green buildings also promote happier employees and occupants, lower operating costs, optimize public relations community benefits. LEED works by awarding projects points across nine key areas of green building:
- Integrative process
- Location and transportation
- Sustainable sites
- Water efficiency
- Energy and atmosphere
- Materials and resources
- Indoor environmental quality
- Regional Priority
The new LEED office building is on the construction process which expected to complete in 2020.
3. Efficient Office
Implementation of SAP and mobile application reduced significant amount of paper usage and wastes, in which provides long-term positive impact to reduce the GHG emissions. Continuously, more modules will be added in the operational technologies, hence the paper usage will reduce to our target of 15.2 papers/employee/day in 2020. Additionally, this year is the first year we replace the use of CD for Annual Report and Sustainability Report with QR code technology to save more papers and wastes.
In 2018, the following initiatives were to reduce resource consumptions, wastes and carbon footprints.
Green Label Required
Responsible Paper Purchasing
Toilet paper specification to be green label and FSC certified only.
27,398 kg Co2 reduction
Responsible Electricity Consumption (HQ only)
Daily Earth Hour Program
5,351 kg Co2 reduction
Responsible Efficient Office
Information Technology (ex. SAP, mobile app, online internal communication platform) has been playing an important role in saving paper consumption.(Paper usage 16.10/employee/day, down from 17.5/employee/day last year, with target of 15.2/employee/day in 2020)