KBank retooling 2020 targets
Kasikornbank (KBank) will likely revise financial targets this year after the bank’s research unit estimated that the economy will shrink 5% in 2020 amid the coronavirus pandemic, said KBank chief executive Kattiya Indaravijaya.
The bank’s research house, Kasikorn Research Center (K-Research), forecasts GDP at a lower level than previous predictions, mainly due to the intensity of the pandemic’s effect on the economy.
The prediction of a 5% contraction is predicated on the assumption that the outbreak will be contained within the second quarter of this year.
Ms Kattiya, who was appointed the bank’s chief executive this month, said in her first meeting with local media that the bank has been closely monitoring the outbreak and found higherthan-expected case numbers globally and in Thailand.
KBank, the country’s largest lender by total assets, set its 2020 financial targets last year under the assumption that the economy would grow 2.5-3%. The bank aimed for total loan growth of 4-6%, net interest margin of 3.1-3.3%, a non-interest income contraction of 5-17%, a cost-to-income ratio in the mid-40s, credit costs up to 150 basis points and a gross non-performing loan (NPL) ratio of 3.6-4%.
NPLs will increase, Ms Kattiya said, due to the difficulties arising from both the economic downturn and the pandemic.
The bank is ready to provide financial assistance to customers by including debt restructuring measures covering financial burden easing, liquidity support and helping businesses remain solvent.
“Rising NPLs are manageable under the bank’s solid financial condition with more than 16% of tier-one capital base,” Ms Kattiya said. “We are still opening entire channels to service customers both traditionally and digitally, especially payment services. All ATMs have enough money and the mobile banking app works around the clock.”
She said the bank has no plans to lay off staff and is continuing to invest in the digital platform and regional banks. KBank will also set up a fund to invest in startups globally through its venture capital unit.
KBank has the most mobile banking users in Thailand with 12 million users and aims to expand to 15 million users by the end of the year. Transaction numbers via K-Plus, the mobile banking app, are expected to rise 37% this year.
Ms Kattiya said the bank has continued to expand foreign banking activity this year, particularly in China, Indonesia, Laos, and Cambodia.
While foreign banking business represents single-digit percentages of total revenue, the segment has high growth potential, with Chinese business
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We are still opening entire channels to service customers both traditionally and digitally.
KATTIYA INDARAVIJAYA
Chief executive, KBank
contributing the largest portion at 80% of total income from overseas ventures.
Chairwoman of the board Kobkarn Wattanavrangkul, who was also appointed this month, said Thailand will enter an economic recession in line with the global economy because of the coronavirus pandemic.
Despite this, people have confidence in all segments of the country, including the government, public health system and financial system, to overcome the crisis, she said.
Ms Kobkarn, a former tourism and sports minister, said Thailand can manage the outbreak within the second quarter of this year and tourism will gradually resume in the third and fourth quarters. Under this assumption, foreign tourist arrival numbers would be around 17 million this year, representing 50% of last year.
She said the government needs to inject money to help the tourism sector rapidly recover. Creative tourism and integration from all related-parties are
also necessary to return tourism to normal levels, especially in the areas of health, wellness and sports.
When the crisis is over, people will want to travel, especially after spending a long time working from home. The government should prepare a tourism campaign to boost domestic tourism initially, then expand to foreign tourists, Ms Kobkarn said.
“If tourism is able to return as fast as possible, the economy will also bounce back rapidly,” she said.