KBank upping franchise loans
Kasikornbank (KBank), the country’s third-largest lender by assets, aims for 20% growth in new franchise loans this year, says a senior official at the bank.
The bank is targeting 900 million baht in new franchise loans in 2018, said Surat Leelataviwat, KBank executive vice-president.
The food, drink and bakery sectors have the strongest loan demand, followed by retail shops and educational businesses, Mr Surat said.
Of the target, 500 million baht has been allotted to franchisees of 7-Eleven convenience stores and 350 million for Minor Food Group, with the remaining 50 million for franchisees of other brands, he said.
KBank plans to expand the customer base of franchisers and franchisees for loan growth. There are 50 strong-brand franchisers and 300-400 franchisees.
The bank’s total franchise loans outstanding are targeted to rise by 5% this year.
KBank’s outstanding franchise loans amount to 2.5 billion baht, of which 1.8 billion has been extended to franchisees of 7-Eleven convenience stores, 500 million baht to those of Minor Food Group and the remainder to other franchisees.
Non-performing loans (NPLs) in the franchise segment make up less than 1%.
Franchise loan growth will help boost small and medium-sized enterprise (SME) loan growth, despite its small portion, he said.
KBank is also the country’s largest lender of SMEs with the loans outstanding of around 700 billion baht, while its SME NPL ratio is 4.6%.
“Survival rate of the bank’s franchise business customers is high at 99%, compared with around 20% of self-employed businesses,” Mr Surat said.
KBank is offering a special loan package to franchisees of Minor Food Group, comprising the Pizza Company, Swensen’s and Dairy Queen brands.
The bank does not require collateral for the loan and offers a special interest rate at 2 percentage points minus minimum retail rate (MRR) for the first two years and 1.5 percentage points minus MRR thereafter.
The bank caps credit at 80% of investment value to open a new store, outlet expansion or renovation, and for new equipment purchase.
Mr Surat said the bank provided a special package for Minor Food Group franchisees, mainly due to its strong and widely recognised brands.
Kanya Ruengprateepsang, chief financial officer of Minor Food Group, said the company plans to open hundreds of branches for the three brands this year.
On average, investment is 10 million baht for a Pizza Company franchise, 7-8 million for a Swensen’s and 2-3 million for a Dairy Queen.
KBANK shares closed yesterday on the Stock Exchange of Thailand at 200 baht, up 50 satang, in trade worth 1.3 billion baht.