Global volatility directs BBL strategy

"We have to look closely at the export trend as the impact of the global economy will start to be seen next year," Kosit Panpiemras, executive chairman of the largest local bank by assets, said yesterday.

 The country could not avoid the impact of the world economy because of the trade linkage.

 The volatility of the world economy would direct which way the bank should go.

It learned that Japan's tsunami in March could rattle the Thai economy in the second quarter. The shortage of auto parts in Japan also tripped up the Thai auto industry.

The tsunami effect convinced Bangkok Bank that gross domestic product growth this year could not hit 4 per cent as predicted. GDP is now expected to expand 3.6 per cent, he said.

The AEC, which is scheduled for full implementation in 2015, is a challenge for Thai business and banking. The bank must have a plan in place to cope with the AEC, he added.

President Chartsiri Sophonpanich said the big question mark for the bank in 2012 is how to prepare human resources, funds and branches to deal with the AEC.

The bank will focus more on preparing human resources than adding branches because it can cooperate with foreign bank partners to serve investors.

Bangkok Bank operates 25 branches in 13 countries. The latest one will open early next year in Surabaya, Indonesia.

The bank will include in the business plan how it would work with customers. Customer relationship management is essential for securing customers amid the fierce competition among banks and the uncertainty of the global economy.

Kosit said local branch network might need to be increased to strengthen the bank's edge in the industry. The 2012 business plan is expected to be completed in two to three months.

The bank would not move aggressively but take measured steps to ensure quality growth.

Its loan portfolio would be set to increase in line with GDP.

Next year, GDP is expected to grow 4 per cent, so that means Bangkok Bank's loans would grow by 4 per cent.

The bank's loan growth this year was set at 6-8 per cent, but its loans are already over target, he said.

Chartsiri said the bank prefers to maintain its current loan portfolio at 40 per cent wholesale, 30 per cent SME, 15 per cent retail and 15 per cent international.

The bank's fee income has stayed at 25-27 per cent of total revenues even though its net interest margin has narrowed to 2.6 per cent from 2.9 per cent earlier.

Kosit said loan growth was not as much of a concern as deposit mobilisation.

All banks have seriously chased deposits, so the fierce competition in deposit taking would continue to be witnessed in the industry.

"In my personal view, local people must be encouraged to increase their savings along with consumption. The government is stimulating domestic consumption. But if people are not urged to learn to save, the country might face the same situation as some countries in Europe are facing," he said.

Savings in Thailand has declined from 25 per cent of GDP in 1997 to 15 per cent this year.

The low level of savings in the country is behind the fierce fight for deposits, he added.