Kiatnakin banking on Phatra know-how to boost SME lending
Kiatnakin Bank hopes to leverage the know-how gained from its merger with Phatra Capital to boost its SME lending portfolio to Bt10 billion from the current Bt1 billion within three years.
Head of retail banking Siri Senajak yesterday said the bank next year would strongly promote lending products for small operators that are already KK hire-purchase, or lease-to-own, borrowers.
The bank has upgraded its systems to prepare for further penetration of the SME market, he said.
Phatra, meanwhile, has expertise in the investment and financial-advisory field, which the bank hopes to utilise.
KK will start providing loans to hire-purchase borrowers because 80 per cent of these customers are small and medium-sized enterprises, which is considered sufficient for expanding the bank’s SME lending significantly within three years.
The bank will also offer personal loans to its hire-purchase clients, he added.
Hire-purchase clients will be the initial focus of the bank’s cross-selling of products. Providing additional loan products to existing customers will also help save costs, resulting in lower interest rates, Siri said.
By 2015, the SME loan portfolio is targeted reach Bt10 billion, he said. The current level is Bt1 billion.
“Competition in the hire-purchase market is still intense, and the interest rates are low. We cannot cut rates to beat the larger banks because we have higher funding costs,” the banker said.
KK’s retail banking portfolio stood at Bt114 billion last year, with lending from hire-purchase accounting for 80 per cent and the remainder coming from SME and personal loans.
The ratio is expected to be 70:30 this year, he said, adding that retail banking was projected to grow 21-22 per cent from the 2011 level.
With such a high proportion of hire-purchase regarded as a business risk, the bank will gradually give more importance to SME and personal lending, starting next year, he said.
As part of this move, KK will offer personal loans to hire-purchase customers who have made at least two years of instalment repayments.
The bank also plans to increase the proportion of hire-purchase business for used vehicles, as it wants to generate more interest income.
Used vehicles currently account for 45 per cent of its overall auto lending, a level which the bank targets increasing to 50 per cent, Siri said.
