KBank wary of lower loan demand from exporters
KASIKORNBANK IS concerned that although its corporate lending can still achieve the overall growth target of 4-6 per cent for this year, exporters might not require as much credit as normal to deal with the peak lending period.
Executive vice president Vasin Vanichvoranun yesterday said that while the demand for loans from exporters’ trade activities in general would normally be high in line with the export season, which starts this quarter, the Kingdom’s overall export value in July – the first month in the quarter – showed a year-on-year drop of 1.48 per cent.
The bank is waiting for the government’s export declaration for August. If there is a further contraction, it will be a bad sign for exports as well as the economy, he said.
“Lending for trade activities at KBank has increased, which means that even if the export figure in August shows a decline, we will still grow as a result of refinancing,” he said.
He pointed out that corporate lending growth, however, was not driven mainly by new investment by the private sector, but by businesses restructuring.
Lending related to new investment was previously buoyant among manufacturers thanks to double-digit economic growth in China, but since the Chinese economy returned to single-digit expansion, it has affected capacity utilisation in the Thai manufacturing sector as well, he explained.
Before the massive flood in Thailand in 2011, the utilisation rate in the manufacturing sector was 70 per cent, but the figure is now 65 per cent.
Lending for new investment this year is showing flat growth, Vasin said.
Meanwhile, financial-market volatility has created a problem for the bank in terms of fee income from investment banking.
Many corporate customers that planned to raise funds from the capital market have postponed their plans until stability returns, said the executive.
Therefore, KBank has to drive fee income from recurring sources, including cash management, which is aimed at enhancing corporate customers’ businesses efficiency.
Fee income this year is targeted to grow by 10 per cent, with 12-16 per cent of the expansion coming from recurring fees.
New tool
KBank yesterday introduced a cash-management tool called K-Connex for the provision of real-time help for mid-size through to large corporates with more than five subsidiaries.
Vasin said that by using the K-Connex service, a parent company would be able to see the cash flow and liquidity of its subsidiaries’ accounts. This would enable it to reduce overall financing costs by at least 10 per cent from bank borrowings, because the liquidity of one subsidiary could support another unit that may require working capital.
Customers can maximise profit by reducing their demand for loans and increasing deposits, he said, adding that KBank hopes the product will help expand the deposit base of larger corporate customers next year by 7-10 per cent to Bt300 billion.
Corporate deposits this year are expected to grow by 5 per cent, and fee income by 12-16 per cent.
