KBank limits China lending, focuses on short loans
Play
KASIKORNBANK has limited its lending in China to 2.2 billion yuan (Bt11.5 billion) this year, a change from the previous target of 2.8 billion yuan, as it focuses on trade finance to lower its exposure to risk from slower growth of the Chinese economy.
Pipit Aneaknithi, KBank executive vice president and head of its China business division, said it mostly offered short-term loans in that country with periods of one or two years, so outstanding loans were not a large amount.
The bank will stop offering loans to Chinese small and medium-sized enterprises in September as its outstanding loans will reach 2.2 billion yuan next month. After that the bank will prepare to concentrate on low-risk assets, including trade finance.
KBank has two China branches, in Shenzhen and Chengdu.
Pipit said that even though income from trade finance was smaller than interest income, the bank wanted to oversee quality assets.
He said the bank had acknowledged that it should find a way to offer unique services to ensure low risk while assisting Chinese SME customers amid the economic slowdown. KBank has expertise in trade finance in Thailand, which it could apply in China as well.
KBank was quickly developing a trade-finance platform so it can offer the service to Chinese SMEs by the first quarter of next year, he said.
Currently, KBank grants lines of credit to Chinese SMEs with assets below 300 million yuan and employing no more than 1,000 people. Like those in Thailand, SMEs in China have limited access to funding.
Banthoon Lamsam, chairman of the bank, gave the green light for the cut in lending and the business plan of KBank’s China business division, Pipit said.
He said that after improving its trade-finance infrastructure in China, the bank projects that the trade-finance volume next year will expand to 5 billion yuan from the target of 600 million yuan this year.
Long-term, KBank hopes to become a local bank in China. So far, Bangkok Bank is only Thai bank that has been granted that status.
Pipit said the Chinese economy was expected to be seriously affected if the shadow banks were not brought under control. Shadow banks were set up by local authorities and private investors as joint-venture companies offering loans to all industries, especially the property sector. They are unlike commercial banks as they can set their own interest rates.
Foreign banks account for only 1.7 per cent of the market, so are not affected by the problem of shadow banking.
