Banks bolster deposit base with temples' donations

Krung Thai Bank (KTB), Siam Commercial Bank (SCB) and Kasikornbank have appointed relationship managers to deal specifically with temples that deposit money. At Bangkok Bank, the country’s biggest lender, branch managers deal with temple clients.

There are about 34,000 temples across the country. Many are in big cities and sit on huge amounts of cash as affluent temple-goers donate to make merit. This huge source of funds has caught the attention of banks, which are raising their current and savings account (CASA) bases to serve skyrocketing loan demand.

Weidt Nuchjalearn, senior executive vice president of KTB, said it was estimated that the temples had combined savings of Bt200 billion.

KTB, the second-largest commercial bank, turned its focus towards the segment a few years ago because of the enormous savings held by temples. Relationship managers in each branch work closely with temple administrative committees and educate them on new savings products and other investment products, in case the temples are seeking higher returns.

The relationship will lead to a strong bond between temple clients and the bank, he said.

Mostly, temples keep money in fixed deposit accounts, which offer higher interest rates than savings accounts. But some money is kept in savings accounts, for deposit and withdrawal convenience. KTB has recommended to its temple clients that they allocate some savings to investment products such as mutual funds.

"Money from the temples is crucial to maintain our CASA at a high level, which will help lower our funding costs," Weidt said.

KTB aims to maintain CASA at no less than 60 per cent of the total deposit base. Current and savings accounts offer much lower interest rates than fixed accounts, which constitute the rest of the base.

Aside from conventional products, the bank plans to reach out directly to temple-goers. In store is a new deposit account, opened specifically for a temple that is asking for donations. People can directly deposit their donations into the account, without having to go to the temple and make a cash donation.

Manviga Piyapimook, a senior vice president at KBank, said temples were a very lucrative segment. Though the combined deposits are small compared with the banking industry’s deposit base of Bt7 trillion, the amount has shown growth thanks to higher donations.

"We have relationship managers to take care of large temples that deal with large donations because these temples need cash-management services apart from deposit accounts," she said.

At KBank, temples are classified as non-profit-organisation clients. Of the bank’s deposit base, which is as large as Bt1.1 trillion, temple deposits account for about Bt50.5 billion, or 5 per cent. About 70 per cent of the deposits are in fixed accounts, and the rest in savings accounts. KBank’s CASA ratio is 50-60 per cent.

Thanks to merit-making money, most of the bank’s temple clients see their income exceed expenses, Manviga said. As such, for better return, they are advised to park most of their funds in fixed accounts. The bank has to ensure convenience to these special clients, knowing that they can move their money anywhere for better service.

Rungruang Sukkirdkijpaibooon, first executive vice president at SCB, said temples and other non-profit organisations were unlike individual customers: They demand priority service. "Basically, banks attempt to draw savings from clients. But beyond that, we need to provide the best services and best financial products that match their behaviour," he said, adding that cash-management services were in demand.

As at other banks, temples are in the non-profit-organisation client category at SCB. The proportion of their deposits now is small, but the bank aims to boost it aggressively. It plans to draw 15-20 per cent of its deposits from non-profit organisations over the next few years.

"The market is big enough to draw attention from financial houses," he concluded.