KBank ready to cash in on urbanisation
The growing economy in the provinces from increasing urbanisation is creating new opportunities for investors and financial houses, according to Kasikornbank.
Vasin Vanichvoranun, executive vice president, said the bank was catching up with the urban migration last year after seeing more real estate activity moving out of Bangkok, the reduction in unemployment of provincial people and their rising household income.
The urban migration has sparked greater demand for foreign investors and local investors, which means they are expected to require financial facilities, he said.
He said the servicing value chain was the first business to cash in on the urban migration because of the relationship with personal consumption. KBank expects the investments in real estate, modern trade and medical care and from automobile dealers will grow in line with the urbanisation.
"We saw that SMEs in provinces have upgraded to corporates, and many corporates in Bangkok, including foreign investors, are expanding their businesses to the main provinces," he said.
According to KBank, nine provinces – Chon Buri, Phuket, Khon Kaen, Surat Thani, Chiang Mai, Nakhon Ratchasima, Udon Thani, Rayong and Songkhla – have shown greater economic growth, with combined business value of Bt534 billion.
The annual economic growth of the nine provinces was 10 per cent on average against 6-7 per cent in Bangkok, he added.
KBank has picked five main |business hubs – Nakhon Sawan, Nakhon Ratchasima, Bangpakong, Laemchabang and Hat Yai – to capture the nine provinces, offering total solutions in terms of pre-finance and post-finance and complete packages to business partners for the entire supply chain.
The bank expects the loan proportion in the provincial market will significantly increase over the next three years. Of the total, outstanding loans were Bt359 billion, while loans in the provincial market were tens of billions of baht.
"We target to increase market share in the provincial market to 25-30 per cent within three years from 10 per cent," he said.
He said property, construction materials and automobiles were are expected to drive growth of major provincial areas.
Logistics is the next key driver of the provincial economy.
Vasin said the bank would seriously penetrate provincial markets and shift focus to capital instruments besides corporate loans in a bid to diversify risk from the corporate-loan competition and also boost fee income.
The loan growth of corporate customers this year should not be more than 8-9 per cent because it will give more importance to acting as a fund manager and financial adviser to two companies launching infrastructure funds worth a combined Bt10 billion.
