KBank to encourage corporate clients to utilise capital market

Chongrak said the targeted corporates represented 80 per cent of the bank’s total corporate clients – the main focus of KBank.

The executive vice president |said his division had outstanding loans worth Bt400 billion, with |half the money lent to clients with an annual turnover of between Bt400 million and Bt5 billion. He said that meant the bank had room to grow by motivating those firms to raise funds through the capital market.

He said that around 39 per cent of KBank’s corporate clients with an annual turnover of between Bt1 billion and Bt5 billion had experienced an increase in profit and sales revenue despite not accessing the capital market.

The bank saw business opportunities for corporates based on the assumption of a requirement for funds totalling Bt1.27 trillion, of which Bt250 billion was domestic private investment, and private investment relating to government projects worth Bt270 billion. 

The rest of the funding requirement would be corporate investment in Asean Plus Three – the 10 Southeast Asian member states plus China, Japan and South Korea.

Chongrak said half of those requirements were expected to be fund mobilisations through the capital market thanks to low interest rates and corporates wanting to access sources other than bank loans.

He said fund mobilisation through the capital market had grown 22 per cent in the primary bond market between 2012 and 2014, 34 per cent for initial public offerings from 2008 to 2013 and 40 per cent in mergers and acquisitions from 2008 to 2013.

Based on this trend, KBank believes demand for loans from corporate clients will not be as much as before, with loan growth of between 4 and 6 per cent for those clients this year.

“We will increase our focus on how to use the bank’s balance sheet and customers’ cost efficiency,” he said. “The ratio of fee income plus income from deposits of corporate customers to average assets this year is projected to reach 2.67 times, growth of 17 per cent from 2.28 times in 2014.”

Chongrak said KBank was targeting a 13-per-cent increase in fee income from corporate business and revenue growth for that segment of 15 per cent. 

Fee income should increase from 45 per cent of the bank’s total income to 50 per cent this year, with most of it coming from its advisory services and the capital market, he said.

The bank will increase its advisory team to deal with these strategies. 

Chongrak said the political climate in Thailand could affect corporate-sector activities.

“If the political situation is stable, the government’s projects will go ahead on schedule, which will help boost confidence in the private sector,” he said.

However, a return to political unrest would be a negative factor.