‘Building of people’ the key to Krungsri strategy
BANK OF AYUDHYA (Krungsri) is determined to build muscle in the area of commercial banking by making “the building of people” the key element in fostering relationships with business customers, as it seeks to become a more meaningful player in the segment over the next few years.
Following completion of the integration of Bank of Tokyo-Mitsubishi UFJ’s (BTMU) Bangkok branch with Krungsri, which took place last year, BTMU – the major shareholder in the Thai bank – has acknowledged that its subsidiary should now spend two to three years building up its commercial banking.
This is because Krungsri’s main focus in the past several years was in retail banking, to comply with the policy of its previous major shareholder, GE Capital, said Pornsanong Tuchinda, the bank’s head of commercial banking.
GE Capital’s expertise made Thailand’s fifth-largest bank a front-row consumer-finance player, especially in the credit-card and auto-loan fields, he said.
Before integration with BTMU, the retail-banking loan portfolio accounted for more than 50 per cent of Krungsri’s overall lending.
Now, post-integration, retail banking contributes 44 per cent, while commercial banking – including SME (small and medium-sized enterprise) lending – accounts for the lion’s share, at 56 per cent.
The key element for commercial banking is people – followed by branding, process and infrastructure – and building the right type of workforce takes time to achieve, Pornsanong said.
Importantly, commercial banking has to offer clients total solutions and be able to deliver their expectations on a consistent basis, and people are the key to achieving this goal, he added.
“In the future, the market share of Krungsri’s commercial banking should be close to that of the top four banks, but it will not rise sharply unless what we offer is meaningful.
“If we wanted to gain a much greater market share [quickly], we could just give out loans and require little collateral, but the relationship factor is important – and something we cannot buy. Relationships are formed by people, and they are essential for the business of commercial banking,” he explained.
“The top-tier banks have also spent much time winning over customers’ hearts. Corporate customers are not just after money, as they need a bank that knows their business well … one that knows about the investment and expansion.
“And when their expansion has matured, they expect expert advice from the bank to help them deleverage the business. Meanwhile, SME customers need a bank that can help them adjust,” Krungsiri’s commercial-banking chief said.
Krungsri has an asset size of around Bt1.8 trillion and, if it were to grow too fast, it would have no muscle, and only fat, he added.
About Bt1.4 trillion of the assets are made up by its loan portfolio, of which non-retail banking accounts for Bt785 billion. Some Bt404.6 billion of the Bt785 billion is lending to Thai corporates, while Japanese companies and multinationals account for Bt168.79 billion and SME loans for Bt211.75 billion.
Tech-base industries – following the government’s Thailand 4.0 goals – healthcare business in light of the “ageing” society, and the construction and raw-material sector due to the state’s mega-projects, are the primary focus of Krungsri’s commercial banking, Pornsanong said.
Krungsri aspires to become a top-tier financial group in Thailand by the end of next year, and growing its assets is one of three key strategies for achieving that goal.
Being in the top tier in regard to corporate customers is a major aim and something that must be attained through total solutions, he said, adding that being one of the top three banks servicing SMEs is another crucial target.
“Our main shareholder and management want to build people first, because we are looking to the long term by balancing customer satisfaction, revenue generation and employee satisfaction,” he said.
The aspirations of BTMU make the bank’s work easier, as the Japanese institution believes that making Krungsiri a stronger player in commercial banking is not a 100-metre sprint, but a marathon run, he added.
Trust is crucial
Predictability and consistency are the expectations of corporate customers, and Krungsri has to be the trusted bank for commercial clients, he stressed.
Meanwhile, Krungsri is the only Thai bank to have enjoyed overall loan growth as high as 7.7 per cent for the first nine months of the year.
Its commercial-banking operations recorded growth of 5.3 per cent in the first nine months of the year.
The bank is not, however, only intent on expanding its size, as it also wants to be a leader in each customer segment, he said, adding that BTMU is not rushing Krungsri into expanding aggressively.
