KBank to review strategy in face of DSR guidance
Kasikornbank (KBank) is set to review its retail banking business plan as it anticipates fallout from the central bank's debt-service ratio (DSR) guidance.
The Bank of Thailand is concerned about those earning below 30,000 baht a month, and this segment has been the bank's target since the beginning of this year, said senior executive vice-president Wirawat Panthawangkun.
The segment is a key target group for KBank to expand consumer loans this year after the bank adopted information-based lending technology, called intelligence lending.
Low-income clients, mostly payroll, blue-collar employees with a monthly income of about 7,500 baht, represent more than 10% of the bank's total retail customer base.
The new DSR guidance deals a blow to the bank's business strategy, despite good loan quality in the segment.
Mr Wirawat said the bank's retail loans to this group have not soured since the beginning of the year, thanks to the low-risk payroll customer base and the bank's information-based lending.
KBank, the country's second-largest lender by total assets, operates offline and online services under the intelligence lending platform, targeted at both retail and small and medium-sized enterprises. For consumer loans, the bank offers them via its mobile banking app, K Plus.
With data-based lending, the bank managed to extend new loans worth 10.3 billion baht during the first half and aims to lend 30 billion baht for the full year.
Moreover, the approval rate of the data-based lending platform continues to increase and now stands at 12%.
Mr Wirawat said the bank will stick to the existing target for intelligence lending expansion this year but needs to adjust its business strategies in detail and adapt the intelligence lending platform in compliance with the Bank of Thailand's new DSR guidance for vulnerable groups capped at 70%.
The bank will also give higher weight to affordability when considering loan approval to the customer segment.
"We will continue aiming for the vulnerable group segment to give them access to loans under the regulator's guidance to keep them away from loan sharks," Mr Wirawat said, adding that the bank's payroll employee base is now higher than 2 million.
KBank's total retail loans outstanding amounted to 423 billion baht at the end of June, up 5% from the end of last year.
The bank is maintaining its retail loan growth target in a range of 9-12% this year.
Non-performing retail loan ratio increased to 3.9%, as of June, from 3.7% at the end of last year, mainly due to contributions from mortgage lending.