KBank hoping to upgrade Kunming

Teeranun Srihong, president of KBank, said Kunming and Nanning – also in the south of China –were both attractive locations for the bank, but the former was the more interesting as it had border trade with many countries, while the Chinese government plans to construct rail projects linking the province with Asean.

Nanning, on the other hand, only has a border with Vietnam.

KBank, which has had a representative office in Kunming for several years, is being urged by the local authorities to upgrade to a full branch in order to support Yunnan province’s SMEs (small and medium-sized enterprises), many of which want to trade with Thai companies, he said.

The fourth-largest bank by assets in Thailand, KBank’s strength is in SME banking, as reflected in its having the biggest SME loan portfolio in the sector, at more than Bt560 billion.

Teeranun said the bank had witnessed a greater trade flow between Kunming and GMS countries, including Thailand, and it had the capability and capacity to serve such increased activity.

Moreover, KBank has partner banks in the region that can help support both SMEs in Yunnan and Thai companies doing business in the province, he added.

The president said the bank hoped to open a full branch in Kunming this year, while the plan to upgrade its status to that of a local bank in China would be postponed to next year.

Despite China’s economic growth having slowed, its gross domestic product is still expanding at an annual rate of 7 per cent, and KBank’s branches in the country continue to perform well when compared with other countries in which it has a footprint, he explained.

In mainland China, KBank has two branches – in Shenzhen and Chengdu – a sub-branch in Longgang district, in Shenzhen, and three representative offices, in Beijing, Shanghai and Kunming.

"We are able to make a profit from our branches overseas thanks to border-trade activities in the GMS. Apart from the proposed branch in Kunming, we have already submitted a proposal to open a branch in the Cambodian capital, Phnom Penh," he said.

Meanwhile, in Thailand, Teeranun said KBank had seen better signs for the economy as a result of increased public investment, with the government trying to inject more spending to spur the economy in the second half of the year.

Spending stimulus needed

He said that the government should, however, also introduce a short-term measure such as a tax deduction in order to encourage consumer spending, because public investment projects generally took longer to have a positive effect on spending.

People who want to repair or improve their homes should be granted a deduction from their annual income-tax bill for the amount spent, he suggested, adding that this would be similar to the way the government had enhanced spending in tourism by allowing individuals and businesses to deduct tourism expenses from annual tax payments.

Domestic tourism this year has been booming, with much of the credit going to the tax-deduction scheme, he said.

Moreover, if consumers were given a tax deduction tied to work being done on their home, the measure would benefit SMEs in the building and construction-material sectors, as well, he said.

As to SME financing, KBank’s chief said that unlike corporates, which could raise funds from the capital market, SMEs were fully reliant on bank loans.

Given slower loan demand, the bank believes its lending growth this year will not exceed 6 per cent, he added.