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KBank expects 6-7% loan growth in 2016 via digital banking, the “Bank of AEC+3”

    Recently, 19 Nov 2015, at KASIKORNBANK Phahon Yothin Building, Mr. Predee Daochai and Mr. Teeranun Srihong, KBank Presidents, held a press conference on the Bank’s 2016 business plan, entitled “Advanced Digital Banking towards the Bank of AEC+3”. KBank aims to see its lending growth of 6-7 percent next year, given that Thailand’s GDP growth is 3 percent, using a strategy to become the business leader whereby it acquires at least 3 million new digital banking customers. With an ambition to become a leading bank within AEC+3, KBank has accelerated the building of cross-border networks and service expansion amid new regional opportunities, hoping to increase lending abroad by 80 percent, over-year.

KASIKORNBANK aims to see its lending growth of 6-7 percent next year, given that Thailand’s GDP growth is 3 percent, using a strategy to become the business leader whereby it acquires at least 3 million new digital banking customers. With an ambition to become a leading bank within AEC+3, KBank has accelerated the building of cross-border networks and service expansion amid new regional opportunities, hoping to increase lending abroad by 80 percent, over-year. Government infrastructure projects and other investments, along with tourism, are forecast will be major economic engines.
According to Mr. Predee Daochai, KBank President, the 2016 Thai economy will primarily be driven by 20 infrastructure investment projects valued at 1.77 trillion Baht, and may rise 3.0 percent. Other major economic drivers should include the government’s 544-billion-Baht fiscal spending, an increase of 20.7 percent over 2015, plus SME assistance measures, and tourism sector receipts.
    Global economic growth remains fragile, hindered by the Chinese economic slowdown that will likely also curb Thai exports next year. Nevertheless, commodities are bottoming out and stabilizing, thus they could shore up exports with growth of 2 percent in 2016. Prospects are bright for border trade. Government stimuli in Border Special Economic Zones and Cluster Based Special Economic Zones should boost local businesses, while regional trade will no doubt increase via greater trade and investment within Cambodia, Lao PDR, Myanmar and Vietnam (CLMV Group).

    In light of this, KBank has established 2016 business targets in line with that economic outlook, expecting loan growth of 6-7 percent, plus a cost-to-income ratio of 45-47 percent and non-performing loans to total loans of 3.5-3.6 percent. The Bank is also placing an emphasis on maintaining its “Customer’s Main Bank” status across all customer segments with enhanced digital services. Gearing up towards “the Bank of AEC+3” strategic direction, amid regional growth opportunities, KBank is applying ingenious and relevant risk management approaches with the aim of customer satisfaction and long-term risk-adjusted sustainable profitability.
Mr. Teeranun Srihong, KBank President, has said that in order for KBank to meet its targets in 2016, it will adopt four main strategies:
1. To remain customer’s main bank in all segments and reinforce brand strength. KBank has led the market as customers’ main bank across nearly all segments. Its customer portfolios have expanded significantly over the past five years.
2. To become the leading “AEC+3 Bank” to hasten opportunities arising from the AEC advent and business opportunities from connections with China, Japan and South Korea.
KBank has been extensively promoting strategies toward cross-border business by offering special services to customers, expanding into the AEC+3 bloc, with the comprehensive Seamless Cross-border Solutions. The three main services include Regional Value Chain Solutions that connect customers’ businesses, and thus optimize internal management efficiency within business networks. This service is aimed at prominent industries that are involved in consumer products and services, as well as those in infrastructure and logistics. Investment Solutions provide investment advisory services to customers intent on investing in the CLMV or Indonesia via KBank-assisted business matching and mergers. Trade and Payment Solutions allow customers to transfer money or make payments via Border Trade Solutions, e.g., forming a border trade center in Mae Sot to correspond to the establishment of the Mae Sot Special Economic Zone, and designing Digital Cross Border Payment Solutions with partners to serve cross-border payments and money transfer using digital banking systems.
Moreover, KBank continues to expand the service channels via Locally Incorporated Institutions (LII) conversion in China, and branch opening in Cambodia, plus branch expansion in Lao PDR, plans for branches in Vietnam and Myanmar, as well as greater cooperation with partner banks. KBank currently has an extensive service network with six branches abroad, i.e., the Shenzhen Branch, Longgang Sub-Branch in Shenzhen, Chengdu Branch, Hong Kong Branch, Los Angeles International Branch and Cayman Islands Branch; one LII in Lao PDR; nine Representative Offices in Beijing, Shanghai, Kunming, Tokyo, Yangon, Hanoi, Ho Chi Minh City, Jakarta and Phnom Penh; plus 72 partner banks in 11 countries—Japan, South Korea, Germany, Italy, Lao PDR, Vietnam, Cambodia, Indonesia, Malaysia, the Philippines and China.
In 2016, KBank expects that foreign businesses will boost loans to grow 80 percent and net earnings to expand 40 percent.
3. To utilize digital technology to stay atop on digital banking service provision and enhance the bank’s strength through digital transformation. In 2015, according to a Bank of Thailand report, KBank remains the leading digital banking service provider with the largest number of digital banking customers at 38 percent of the market (data as of the end of June 2015). KBank’s digital banking transactions have risen consistently to 770 million transactions at the end of September 2015, expanding 50 percent YoY.
KBank has been successful in leveraging its brand and position as a digital service provider, ranked number one in the AC Nielsen market survey entitled “Digital Banking Top of Mind Brand Perception Rating” for two years in a row since 2013.
To carry on with its digital transformation, KBank has established a special task force to devise strategies and implement them effectively. This special team makes sure that KBank delivers an impressive customer experience using enhanced internal operating procedures and forward-thinking digital business models.
On top of a wide variety of digital banking services for retail customers, KBank plans to add even more next year, using such technologies to upgrade service to business clients. It has introduced an array of new innovations and undertaken targeted marketing campaigns where digital technologies are utilized to support value chain management. Together with that, KBank collaborates with business partners to better accommodate SME clientele toward reaching its business goals via more effective organizational management. KBank assists clients in finding market opportunities, while also providing digital international transfers, facilitating international transactions for business and retail customers.
KBank estimates that total number of account holders enjoying the convenience of its digital banking channels will be around nine million by the end of 2015. They seek to add three million more new users in 2016, which would then represent 30 percent growth over-year.
4. To underscore its excellent services as “Customer’s Main Bank”, thus strengthening its marketing position. Corporate, SME and retail customers alike placed KBank on top of the market in a 2013 brand equity index survey. In 2016, KBank will double down its brand fortification with excellent services as promised.
Mr. Teeranun added that prospects for 2016 seem exciting since the government has been steadfast in carrying out project bidding on many programs, kick-starting some THB300 billion in various investment projects which will create an extensive transportation network both at the domestic and regional levels, establishing ASEAN connectivity. As a result, trade, investment and tourism will be reinvigorated. Economic activity should accelerate after the AEC is fully launched, especially construction and transportation. Telecom businesses will similarly enjoy buoyancy, thanks to increased investments by operators who won 4G licenses. There should be a large increase in demand for non-voice services to meet consumer needs in the digital era, not to mention mushrooming online businesses and e-commerce.
In addition, an upbeat trend is predicted for automotive vehicle/parts exports, whereby production output will be distributed to emerging overseas markets, counterbalancing disappointing domestic sales due to weakened purchasing power. To ensure that all clientele demands are met, KBank, in 2016, stands ready to provide support wherever needed, be it loans, financial advice, service innovations or domestic/international service networks.