BAY brushes off fee income loss

SET-listed Bank of Ayudhya (BAY), the country’s fifthlargest lender by assets, forecasts that scrapping fees for digital banking transactions will wipe out a mere 2-3% of non-interest income this year.

The bank has shifted towards generating non-interest income from other businesses as it realised that digitisation and fierce competition in financial transaction services will continuously batter fee-based income, chairman Veraphan Teepsuwan said at the bank’s shareholder meeting yesterday.

BAY’s fee and service income for the January-to-March quarter surged by 14.7% year-on-year to 7.21 billion baht, driven mainly by fees contributed from wealth and fund management, securities, auto loans, cards, and foreign exchange business.

The bank’s fee and service income jumped by 9.1% to 26.3 billion baht last year.

BAY joined its peers in removing digital transaction fees for inter-bank and cross-clearing zone fund transfers, bill payment, top ups and cardless ATM withdrawals, effective from April 1, in a move to draw more users to its mobile banking app.

Mr Veraphan said the bank has continued to expand retail banking businesses, especially for high-yield products, and the business segment has contributed positive non-interest income for BAY.

For the first quarter this year, its retail loan portfolio amounted to 743 billion baht, accounting for 47.3% of the bank’s loans outstanding at 1.57 trillion baht.

“With tougher competition in digital banking services, BAY has prepared for the change over the past few years,” he said.

In another development, Mr Veraphan said BAY has no plans to merge with other financial institutions in light of the new tax incentives to encourage consolidation in the banking industry to create champion banks.

BAY is confident it is competitive enough to survive by itself and will focus on organic growth rather than mergers, he said.

Apart from preparing for digital platform development, the bank has also embraced implementation of the new international financial standard, International Financial Reporting Standard 9, over the past few years.

BAY shares closed yesterday on the SET at 39 baht, down 25 satang, in trade worth 12.4 million baht.