KBank eyes high growth from mutual funds, bonds
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Lower deposit guarantee expected to influence investors
Kasikornbank is looking at the mutual fund and bond markets for aggressive growth as the deposit guarantee will be cut to Bt1 million on August 11.
“We will offer new mutual funds as another choice for investors, as the lower deposit guarantee is expected to influence customers who want to seek higher returns than deposits,” Pakorn Partanapat, executive vice president, said yesterday.
The Deposit Protection Agency currently provides maximum coverage of Bt50 million per customer per bank.
Since protection for deposit accounts will drop sharply, products such as mutual funds and bonds that yield higher returns could attract investors, so assets under management (AUM) this year should increase faster than deposits, he said.
Last year, deposits and AUM rose by 13 per cent to Bt1.8 trillion. Deposits alone were up 20 per cent to Bt1.3 trillion, while AUM expanded 9 per cent to Bt500 billion.
KBank projects deposits and AUM to grow by 14 per cent to Bt2.1 trillion this year. However, the driver will be AUM, which are projected to soar by 29 per cent versus 9 per cent for deposits.
Bills of exchange (B/E) remain an alternative financial product for investors, however, at Bt5
billion they represent less than 1 per cent of the bank’s total deposits. Their share might increase slightly this year, but not by more than 2 percentage points, because the bank will not focus on B/Es much after the authorities tightened up on the issuance of B/Es to individuals by stipulating a minimum purchase of Bt10 million.
The bank would also boost fee income, targeting double growth from 16 per cent last year to 30 per cent this year. Most of the growth would come from bancassurance, credit cards and debit cards.
Y Generation
KBank has set goals for fee income from retail banking at Bt17 billion this year, up from Bt13 billion last year, and for new accounts at 2 million, up from 1.7 million. The target customers are fixed-income earners and members of the Y Generation, because the bank wants to amplify efficiency in cross selling.
Loan demand would not resurface until next quarter, so retail credit might not expand much and should grow in line with gross domestic product.
KBank expects to lift its retail loans by 12 per cent to Bt284 billion this year. It has high hopes for unsecured loans. It aggressively entered this segment last year with a product called K-Express Cash. Its loan portfolio for this segment is set to double to Bt10 billion this year, he added.
