KTB aims to raise non-interest income bank sees potential to grow segment to 40 per cent of revenue

Kittiphun Anutarasoti, senior executive vice president and the head of wholesale banking, said that amid the slowdown in corporate activities, it was important to focus on non-interest rather than interest income.
He said the gap between interest and non-interest income had widened and the bank had room to grow the latter.
The current ratio of interest versus non-interest income is 75:25, and the aim is to make that 60:40 by 2018, he said.
In addition to treasury, cash and risk management, non-interest income is derived from fees for corporate deals. However, Kittiphun said that amid the economic slowdown most deals this year were expected to be smaller in scale – between Bt3 billion and Bt5 billion for mid-sized corporates.
Mid-size corporates and non-listed companies are the focus for KTB as it wants to expand its customer base away from listed companies, he said.
“Wholesale banking will witness limited income if it doesn’t have new products or new platforms to facilitate customer needs, because the number of corporates in Thailand is smaller than the number of retail and SME [small and medium-sized enterprise] customers,” he said.
Kittiphun said corporate customers at KTB were defined as those with a turnover of more than Bt1 billion annually or a company that borrowed more than Bt500 million.
The bank is adjusting its loan-portfolio mix from low-yield to high-yield, and high-yield loans included long-term loans.
Kittiphun said the fact interest rates were low at the moment provided the bank with a good opportunity to suggest to customers who had small capital to restructure loans from short to long term.
“It is true that long-term loans are the choice for corporates when there is economic growth but we have to find opportunities for customers who we consider can do structured finance,” he said, referring to the transfer of risk via complex legal or corporate entities.
“For companies with an unexciting story but which have a strong financial profile, we recommend they pay a dividend to shareholders from structured finance,” he said.
He said the bank was encouraging corporate customers to raise funds via the capital market because the capital market was also benefiting retail investors who the bank considered could generate income for KTB’s retail banking.
The capital market in Thailand has a volume of less than Bt1 trillion compared with Bt7 trillion in bank loans, he said.
He added that the real-estate investment trust was unlikely to be a choice for corporations that wanted to raise funds because the cost was around 7-8 per cent, the same as fixed income, thereby making REITs unattractive in the eyes of investors