KBank eyeing regional AMC market
Aiming to generate 9 billion baht in income from its foreign banking business next year
Kasikornbank (KBank) has studied bad asset management business in the Asian market, in line with the region's higher distressed debt because of the Covid-19 pandemic, said a KBank executive.
The bank has been approached by some parties in the regional market on bad asset sales from other financial institutions based in the region, especially China, Vietnam and Indonesia, according to KBank's executive vice-president Pattarapong Kanhasuwan.
Initially KBank did not pay much attention to the regional bad asset management business market, mainly due to the unclear direction of such business in the countries, Mr Pattarapong said.
The bad asset management business has several models, such as non-performing loan (NPL) sales directly to the bank, or the establishment of a joint-venture with other banks to conduct the business.
In Vietnam, the bad asset management business of foreign banks is active, especially at Japanese banks. Bad assets in Vietnam's banking sector are largely retail loans.
"There is greater opportunity in the business area across the region in accordance with higher bad debt mainly due to the pandemic's impact. But there is a lack of clarity on the overall business direction and the comprehensive bad debt solutions," Mr Pattarapong said.
After Thailand's financial crisis in 1997, the country's banking sector had been developing bad asset and risk management, particularly the establishment of asset management companies (AMCs) both state-owned and private.
As a result, Thailand has a clear direction on the business direction and bad debt solutions, Mr Pattarapong added.
KBank chief executive Kattiya Indaravijaya said the Thai banking industry also faces a rising trend of NPLs because of the pandemic. However, the higher bad debt of the local banking sector is expected to be manageable under several tools.
The central bank has implemented a number of measures to mitigate the NPL situation, including the launch of licences to set up joint-venture AMCs.
KBank, in collaboration with JMT Network Services, has set up a joint venture AMC -- JK Asset Management -- to manage the bank's bad assets. KBank recently completed the transfer of NPLs worth 30 billion baht to this joint venture.
On Aug 5, KBank opened a branch in Vietnam's Ho Chi Minh City. The branch was upgraded from being a representative office.
Ms Kattiya said KBank has applied for another branch opening in Beijing which is expected to open next year.
Under a locally incorporated institution licence in China, the bank now has four branches in Chengdu, Shenzhen, Shanghai and Hong Kong.
The bank has been preparing to increase its share to 67.5% in Bank Maspion Indonesia from the current level of 9.99%. The process is expected to be completed in October this year.
KBank targets income of its foreign banking business of 9 billion baht next year, representing 5% of the bank's anticipated total revenue in 2023.