KBank targets franchisees

Kasikornbank (KBank), the country’s fourth largest lender by assets, is aiming for a 10th straight year of double-digit growth in franchise loans this year.

The bank expects the segment’s portfolio to expand by 15-16% to 2.5-2.6 billion baht this year, said first senior vice-president Pipavat Bhadranavik.

The bank’s franchise loans enjoyed an annual growth of 10-15% over the past nine years.

Despite strong loan growth, the bank manages to keep non-performing loans (NPLs) of its franchises at a mere 0.2% of outstanding loans, thanks to its stringent lending criteria.

KBank aims to keep its distressed franchise loans at the current level by the end of this year.

“We have around 1,000 franchisee customers from about 30-50 franchise brands, of which loans extended to 10 clients turned sour,” he said.

A portion of the franchisees shut down after banks stopped providing them with funds, as the franchises had failed to meet the bank’s criteria, which are reviewed annually.

The number of franchisers has come down to 30 from 70 in recent years.

Some franchisees left the franchise system and used their own funding to set up businesses. Most franchise owners are unconcerned about the exit of franchisees, as they are a result of improved standards.

Mr Pipavat added that retail franchise businesses amounted to 250 billion baht, or 8% of the country’s retail industry at the moment. Food, beverage and ice cream, and educational franchise businesses show the strong growth of 24%, 21% and 17%, respectively.

In an effort to boost loan growth, KBank has joined with Bangchak Retail to provide loans to small and medium-sized enterprise operators. The bank targets around 80 million baht in lending to be extended by the end of this year.

KBANK shares closed on the Stock Exchange of Thailand yesterday 185 baht, unchanged, in heavy trade worth 1.50 billion baht.