KBank embraces strategy of integration
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Streamlined management ready to face challenges of 'high-speed' era
To achieve sustainable profit growth and keep pace with changes in the banking sector, Kasikornbank, Thailand’s fourth largest lender, plans to integrate its main operations with those of key affiliates.
In line with this, the bank restructured its management team in February.
Krisada Lamsam, KBank vice chairman and chairman of its corporate-governance committee, said banks are entering a “high-speed” era of rapid change marked by furious competition, more regulation and more risk. KBank’s integration strategy is designed to deal with these challenges, he said.
Krisada raised the example of the integration of KBank and its affiliate Muang Thai Life Assurance, which share customers. Integration allows the bank to offer them a range of products and services – right through to the after-service stage – via a single channel.
Integration means KBank branches will serve not only as bancassurance outlets but also as a channel for servicing customers’ compensation claims.
KBank holds a 51-per-cent stake in Muang Thai Fortis Holding, which holds 75 per cent of Muang Thai Life Assurance.
The bank’s goal is that by 2015, around 45 per cent of KBank customers will purchase life insurance policies, and half of Muang Thai Life Assurance policyholders will be customers of KBank, Krisada said.
Most customers that purchase life insurance are in the high-income segment, so the bank plans to expand its penetration of the mid- and low-income segments.
Currently, KBank has a total of 10.9 million customers and Muang Thai Life Assurance has 1.5 million policyholders.
Somkiat Sirichatchai, KBank director and chairman of the risk-management committee, added that the bank seeks to gain a better understanding of life-insurance customers in order to jointly create products, services and after-services, including services to help customers manage risk.
Teeranun Srihong, co-president of KBank, said the integration plan will help strengthen the bank’s main operating and non-interest income.
Predee Daochai, co-president of the bank, said that unlike lending and non-performing loans, which eat into the bank’s capital, fee-based income is low risk and generates healthy profit.
KBank expects to see annual fee-based income grow 13-15 per cent, higher than the 9- to 11-per-cent annual loan growth target. The bank also plans to make syndicated loans to the corporate sector another focus in order to diversify risk.
Last year, KBank’s profit beat that of Bangkok Bank. In the first quarter of this year, KBank’s profit rose to above Bt10 billion, behind only Siam Commercial Bank (SCB), the third largest bank by assets.
At present, SCB leads the banking sector in terms of both quarterly and yearly net profit.
