KTB revamps retail loan portfolio for higher yields
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KRUNGTHAI BANK (KTB) has adjusted its retail loan portfolio and is offering seven new customer segments in a bid to offer the right products to customers and deliver a higher yield.
Luechai Chaiparinya, first executive vice president and group head for the Retail Strategy Product and Segmentation Group, said that personal loans were the bank’s retail banking focus.
He said that KTB had learned that many pay-roll customers of government agencies and state enterprises did not have personal loans.
“Personal loans are certainly high risk, so we should offer this kind of lending to people who we know well such as pay-roll customers,” he added.
Luechai said about 80 per cent of pay-roll accounts were employees in government agencies and state enterprises.
He said the bank would highlight a multi-purpose loan and a Thanawat loan to capture pay-roll customers, with the best annual interest rate at the moment 15-16 per cent.
However, the bank planned to lower the interest rate to lure customers, he said.
He said KTB’s personal-loan portfolio at present was Bt347 billion, close to its mortgage portfolio, the biggest in retail banking.
In the past, Luechai said KTB |had highlighted mortgage loans |and sometimes offered zero interest rate in the first six months in a bid to boost lending. That, however, meant the bank did not receive revenue from those loans in that period.
For mortgage loans, he said the bank’s portfolio as of July was down to Bt365 billion from Bt377 billion last year because it was more cautious in giving loans to some segments such as the self-employed.
He said the bank had witnessed a dramatic drop in housing loan applications, which had resulted in lower new loans.
In an effort to get higher yields, he said KTB had used big data from some 15 million customers to create the seven customer segmentations. The segments helped the bank develop products to better meet customer requirements.
Retail banking also covers small enterprises that have annual sales of no more than Bt20 million.
In those cases, Luechai said, |KTB was wary of lending money |but tried to help them in line |with government policy.
Meanwhile, Cherdchai Chom-phonukulrut, first executive vice president and managing director of the Retail Banking Sales and Distribution Group, said 2017 would mark the first year in which the number of KTB branch closures would be higher than branch openings.
He said this would be the result of some branches no longer making a profit.
“About 50-60 branches are regarded as fitting the above reason but we will hold a workshop and invite the customers of those branches to ensure that if a branch closes, they will not be impacted,” he said.
He said branches that did not make a profit might be suffering from rising non-performing loan (NPL) and not small transactions, with KTB allowing staff to have a stake in branches.
Even if loan approvals were based on the loan-factoring model, each branch was in charge of luring customers and lending was booked at each branch. When the NPLs were too high, branches could not make a profit.
He said KTB planned to provide “do-it-yourself” branches to meet changing customer behaviour, with more customers preferring to do transactions themselves.
Such branches might require only a couple of staff members, Cherdchai said.
