Kasikornbank (KBank) has opted to slow the pace of its digital personal loan business to refine its business model, improving control of the quality of its loan products.
According to chief executive Kattiya Indaravijaya, the bank decelerated the provision last year of digital personal loans, available on the mobile banking app K-Plus, as part of its efforts to enhance the business model.
Specifically, KBank aims to improve its credit scoring and risk management systems to elevate the asset quality of its digital loan services, she said.
"The bank has not established a specific timeline for the improvement of the business model," said Ms Kattiya.
"However, we will resume loan expansion once we are ready."
KBank, the country's third-largest lender by total assets, ranks No.1 in mobile banking services with around 22 million users on the K-Plus platform.
She said the deceleration in digital personal loan expansion is unlikely to significantly impact the bank's overall loan growth trajectory given that digital loans constitute a relatively small portion of its total loan portfolio.
In addition, the bank's digital loan services offered through the Line BK platform offer a promising outlook, said Ms Kattiya.
KBank wants to achieve total loan growth of 3-5% this year. In the first quarter, the bank posted quarterly loan growth of 2.15%, but year-on-year it declined 0.19%.
Tana Pothikamjorn, chief executive of Kasikorn Line, which operates Line BK, said over the past two years the company has enhanced its asset quality through the development of its business model.
Leveraging advancements in machine learning and artificial intelligence, the company has bolstered business efficiency, particularly in the realms of risk management and asset quality control, he said.
Line BK, a social banking platform venture between KBank and Line Corporation, reduced non-performing loans to 4% of the total loan portfolio, a significant improvement from previous levels (which were not disclosed).
With stricter risk management, Line BK has become more selective in its loan criteria and approval processes, resulting in a decline in approval rates.
Prioritising asset quality over loan growth, the company maintained its total loan portfolio unchanged at around 20 billion baht in the first quarter this year.
The stagnant growth rate was partially attributed to the short-term maturity of digital loan services, said Mr Tana.
"Although the company did not grow its loan portfolio significantly, we are still committed to serving underserved segments, including self-employed individuals, freelancers and farmers, ensuring appropriate access to funding sources," he said.