Kasikornbank (KBank) is increasing scrutiny of regional loan growth through stronger risk management and focusing on generating fee-based income from its overseas banking business.
Kattiya Indaravijaya, chief executive of KBank, said the bank would adopt a cautious approach to regional loan growth.
The bank plans to carefully study each market and customer to assess both their needs and associated risks under a robust risk management framework.
"Despite the positive economic outlook in Southeast Asia, particularly in Vietnam and Indonesia, we need a deeper understanding of each market and its customers as a new player," she said.
Given heightened uncertainties in the global economic outlook, geopolitical risks and US-China trade tensions, Ms Kattiya said these factors could impact the Southeast Asian economy. Based on this outlook, the bank intends to exercise greater caution in its regional business operations, she said.
Fee-based income segments, such as digital banking services, cross-border payments and trade finance, are expected to be key contributors to the bank's revenue from its regional business, said Ms Kattiya.
The bank plans to operate its international banking business, known as KBank World Business, under an asset-light strategy, she said.
Vietnam, Indonesia and China are projected to be the core markets contributing to KBank's international banking business this year.
KBank, Thailand's second-largest lender by total assets, operates banking in Vietnam through its KBank Vietnam branch. In Indonesia, KBank holds an 84.55% stake in Bank Maspion.
KBank China opened a new branch in Beijing, its fifth office in the country, in November 2023 to enhance its regional service capabilities.
Kasikorn Research Center (K-Research) expects Vietnam's economy to experience a slight slowdown in the second quarter this year, quarter-on-quarter, because of declining investments from both the public and private sectors.
Vietnam's foreign direct investment in terms of registered capital and public investment are expected to continue declining in the second quarter, attributed to anti-corruption measures, according to K-Research.
The Vietnamese dong hit a historic low against the dollar this year. K-Research expects Vietnam's GDP growth rate in 2024 to be 5.8%, driven by exports and private consumption.
For Indonesia, the research house expects economic growth to fall in the second quarter year-on-year because of a slowdown in exports and private consumption. Weaker economic growth among Indonesia's key trading partners, especially China, Japan, Malaysia, Singapore and South Korea, is expected to affect the country's export growth.
In the first four months this year, Indonesia's exports contracted by 5.1% year-on-year.
The end of short-term economic stimulus packages is likely to reduce Indonesia's private consumption in the second quarter, according to K-Research. However, Indonesia reported high GDP growth of 5.1% in the first quarter.
The research house expects China to achieve 5% economic growth in 2024, an upgrade from 4.5% earlier in the year. However, a new round of volleys in the US-China trade war could pose challenges to China's economy.