KBank looks to retail banking for growth

KASIKORNBANK foresees low growth in lending and income from its business clients as it moves to low-risk segments such as tourism, construction, healthcare and automotive, but expects high growth in lending and income from retail banking instead.
KBank yesterday announced its plans for all three of the sectors it serves – corporates, small and medium-sized enterprises, and retail. These were detailed by three vice presidents: Suwat Techawatanawana, head of corporate business, Surat Leelataviwat, head of SME business, and Noppawan Jermhansa, head of retail business.
Suwat said 2016 was a good year for KBank’s corporate banking, with loan growth of 9 per cent and income growth of 7 per cent, driven by lending to conglomerates in the retail industry to support mergers and acquisitions and financing to the telecommunications sector.
After such high growth last year, KBank does not foresee much growth in 2017 in corporate banking. It projects loan growth in the range of 4-6 per cent and income growth of 1-2 per cent, Suwat said.
He believes tourism will continue to be the standout industry, with the trend of medical tourism enhancing loan demand. The construction sector this year will also fuel loan demand thanks to the infrastructure projects worth more than Bt800 billion that the government plans over the next five years.
“Many construction firms have asked us to issue letters of guarantee, which is an indicator that they are ready to bid for the government projects,” he said. 
The unlocking of beneficiaries of the previous elected government’s first-car scheme from their five-year commitments will spur domestic car sales, while there are also positive prospects for the production of automobiles for export. Hence the automotive segment will also be a focus for KBank, he said.

Confidence in media sector
On the other hand, KBank will attempt to keep media clients that last year witnessed challenges to their business, as the bank believes the media sector will be able to recover after April.
Surat, the head of SME business, said the bank would focus on the value chains of corporate clients in the tourism, construction, healthcare and automotive sectors to carry on loan growth of 4-6 per cent.
KBank was the market leader in SME lending last year at Bt657 billion. For 2016, it reported SME loan growth of 6 per cent but income growth of only 1 per cent because of fierce competition. Surat said income from SME clients this year would not be much different from last year because the bank was opting for low-risk sectors and it wants to maintain the ratio of non-performing loans of its SME clients at no more than 5 per cent. Last year’s NPL rate was 5.1 per cent.
As for retail banking, Noppawan noted that the economy this year was likely to be better than in 2016, as the prices of many agricultural goods show improvement. Therefore, KBank aims for loan growth in the range of 5-7 per cent versus last year’s 2 per cent.
Fee income from retail banking this year is projected to grow by 5-7 per cent, up from 1 per cent last year, she said.
The national e-payment scheme may or may not have a big impact on fee incomes, depending how quickly customers start using it. However, the bank believes that the high volumes of digital banking, card and merchant services, and investment advisory will help offset any loss of fee income from the onset of the PromptPay system.
One-third of KBank’s retail-banking fee income is from transactional banking, and fees provide 40 per cent of the bank’s total retail-banking income.