KBank gears for era of AEC plus 3

Teeranun Srihong, a co-president of the country’s fourth largest bank by assets, said yesterday that to do business in this era, KBank has to focus more on digital banking and the Asian Economic Community plus China, Japan and South Korea.

AEC+3 will be a new growth area for KBank in the next few years because the domestic market will become mature and its market share of 30 per cent is regarded as full.

Assets from the international market will become more significant to the bank in five to 10 years, with a good chance of reaching 10 per cent of its loan portfolio, based on the potential activities in AEC+3.

That would be a big improvement from 1 per cent of Bt1.3 trillion in total assets currently.

The bank has set aggressive growth targets for AEC+3 – 80 per cent for loans and 40 per cent for net earnings.

Loans from international markets are Bt13 billion, of which Bt12 billion is from China and Bt1 billion from Laos.

Earnings from international markets are Bt10 million.

Predee Daochai, the other co-president, said loans from offshore activities can be booked at the head office in Bangkok.

In Asean+3, KBank owns a branch in Laos, three branches in China and one branch in Hong Kong. It also runs nine representative offices.

The bank plans to become a local bank in China next year and upgrade its representative offices in Cambodia and Vietnam to branches. It will open more branches in Laos.

"We will build a seamless cross-border solution in AEC+3 via a regional value chain and mergers and acquisitions services to capture the flows of investment and trade," he said.

The bank can support customers in the offshore market through its 72 partner banks in 11 countries.

Teeranun said that even though KBank commands the digital banking market in Thailand with a share of 38 per cent, it will continue to employ digital technology to keep its leadership and enhance its strength via digital transformation.

The bank recently set up a task force to devise a strategy and implement it to ensure it can deliver a positive customer experience.

Next year, the bank plans to bring business customers onto its digital banking platform, which currently serves only retail customers.

"We aim to add three million new users in 2016, representing growth of 30 per cent from 2015," he said.

Predee said that if the government kicks off the investment push for infrastructure projects and the PPP fast-track projects, gross domestic product is expected to expand by 3 per cent next year, faster than 2.8 per cent this year.

Loan growth at KBank in 2016 is projected at 6-7 per cent.

The bank continues to focus on risk management in the SME credit market because of the worrying trend of rising non-performing loans. Gross NPLs could worsen in 2016 from 2.8 per cent in 2015.

"The expected NPLs of 3.5-3.6 per cent in 2016 should be the highest figure for the bank and we hope the trend line of NPLs will gradually flatten after 2016," he said.