Bank of Ayudhya (Krungsri) has set an ambitious loan growth target for its Japanese and multinational corporation (JPC/MNC) banking business this year, despite experiencing a loan contraction in this segment last year.
According to Bunsei Okubo, Krungsri's head of JPC/MNC banking, Krungsri is targeting a 7% loan growth for its JPC/MNC clients this year, a goal considered ambitious given the bank's 10% contraction in loans within this segment in 2023.
This decline was primarily attributed to the sluggish growth of the Thai economy and the automobile industry.
Despite the contraction in loans, the bank managed to generate positive income and maintain satisfactory asset quality in the JPC/MNC segment last year.
Moreover, Krungsri has adjusted its business strategy to focus on recovering loan growth and enhancing revenue for this year.
Mr Okubo said Krungsri plans to diversify its JPC/MNC loan portfolio by expanding into other industries such as trading, electronics and real estate, in addition to its existing focus on the automobile sector.
Additionally, the bank intends to leverage innovative digital technologies to support its financial products and services to better meet customer needs.
"We foresee improving momentum of the Thai economy and the auto industry this year. Coupled with our strategic adjustments, we are bullish about the recovery of the bank's loan growth this year," said Mr Okubo.
Krungsri, the country's fifth largest lender by total assets, forecasts a GDP growth rate of 2.7% this year, relatively higher than last year's 1.9%.
Despite softer economic growth over the past year, the bank managed a marginal 0.9% loan growth in 2023 compared to the previous year.
Currently, the bank's total outstanding JPC/MNC loans stand at 233 billion baht, with Japanese loans accounting for 88% of the portfolio, maintaining the bank's leading position in the country. The remaining 12% comprises multinational loans.
Moreover, Mr Okubo highlighted the bank's aim to expand its business segment through the environment, social and governance (ESG) ecosystem, collaborating with its Japan-based parent company, Mitsubishi UFJ Financial Group (MUFG), to offer sustainable financial solutions to customers.
According to Mr Okubo, the Krungsri Asean Link initiative will also play a key role in growing the company's businesses, aligning with the high growth potential of countries in the region.
Krungsri Asean Link offers a full range of financial services to help customers grow their business in nine countries within Asean.
The extensive and strong network of MUFG would also help facilitate business expansion in regional markets, he said.
In terms of regional markets, the bank is concentrating particularly on three high-growth economies -- Vietnam, Indonesia and the Philippines -- where growth rates are expected to reach around 5-6% this year.
Given the geopolitical risks, the bank expects multinational investors to relocate their manufacturing bases to the region, including Thailand, which would further support its JPC/MNC banking business, said Mr Okubo.