Krungsri to concentrate on non-interest income this year

“We therefore have to shift focus more on non-interest income after focusing on growing assets. We can expand this income in all sectors through customer-base expansion and income related to lending,” Noriaki Goto, president and chief executive officer, said yesterday.
The bank set out a plan in 2015 to become a top-tier financial group by expanding assets, increasing non-interest income and reducing the cost of funds. During the past two years, Krungsri has done well in terms of asset growth, but increasing non-interest income is not easy.
To expand this kind of income, Krungsri must be the main bank for customers, but Thai banks have held customers captive for decades, Goto said. 
Krungsri can compete when Thai corporations go outside, as the bank can leverage the network of Mitsubishi-UFJ Financial Group to service their expansion.
Non-interest income last year was Bt18.17 billion, while interest income was Bt61.97 billion, so the split was 32:68, but the bank doesn’t have a suitable formula for the ratio.
The bank targets non-interest income this year to grow by no more than 5 per cent. Last year, Krungsri reported non-interest-income growth of 11.7 per cent.
With the aspiration to become a top-tier bank in 2017, the bank has left the target for its loan portfolio at 40:60 retail to business customers, even though retail growth last year was faster than loan growth from business customers.
The retail-loan proportion was 44 per cent and it could go higher this year because several corporations both Japanese and multinational, which are targeted customers, are still waiting to see the economic circumstances before deciding on investment.
Krungsri aims for loan growth of 6-8 per cent mainly from retail customers this year.
The bank will be more cautious about extending credit to small and medium-sized enterprises, especially small businesses and those involved with commodities, as they still pose a risk of creating non-performing loans, Goto said.
The bank will limit its NPL ratio this year at 2.5 per cent, up from 2.24 per cent last year.
The bank plans to write off bad debt of Bt1 billion to Bt3 billion this year as part of NPL management. Last year, Krungsri sold NPLs worth Bt2.8 billion.
Under the plan put forward in 2015, Krungsri had aspired to open 100 branches to take its network to 800 nationwide. In the past two years, Krungsri launched 50-60 branches, but it has adjusted its branch-roll-out plan after seeing major banks slow their expansion.
Some banks have closed branches because of digital banking. 
Krungsri this year will open around 10 branches, taking the total to 668.