Kasikornbank (KBank) is seeking new revenue streams through the management of bad assets via its joint venture asset management companies (JV-AMCs), in response to the rising trend of non-performing loans (NPLs).
According to co-president Rungruang Sukkirdkijpiboon, the bank is establishing a new JV-AMC in collaboration with Bangkok Commercial Asset Management (BAM), in addition to its existing joint venture JK AMC. The primary goal of both JV-AMCs is to generate new sources of income.
"We believe the bad asset management business will provide stronger income as NPLs increase across the banking industry. Partnering with experts in this field will help the bank tap into new revenue streams," Mr Rungruang said.
KBank, the third-largest lender in Thailand by total assets, has operated JK AMC through its subsidiary, Kasikorn Vision, since 2022 in partnership with JMT Network Services. The bank is awaiting approval from the Bank of Thailand for a business licence for the second JV-AMC, collaborating with BAM.
BAM is the country's largest AMC with bad assets of around 500 billion baht under management, focusing on managing secured bad loans with fixed-asset collateral. JMT specialises in managing consumer and unsecured bad debts.
He said these JV-AMCs should provide KBank with the option of managing distressed assets.
However, the bank does not prioritise transferring its own bad debts to these JV-AMCs, said Mr Rungruang. Any sale of distressed assets to these ventures would follow the same process as sales to other AMCs, he said.
Mr Rungruang said KBank continues to manage its distressed assets through its internal bad asset management and debt collection teams. The bank is containing its NPLs and maintaining bad debt at satisfactory levels, he said.
As of June 2023, KBank's gross NPL ratio was 3.18%, in line with its target ceiling of 3.25% by year-end. The bank's credit cost was 189 basis points, within its target range of 175-195 basis points for the year.
Recently KBank and BAM notified the Stock Exchange of Thailand of their plan to establish a JV-AMC with registered capital of 25 million baht, with each party holding a 50% stake.
He said this JV-AMC aligns with the central bank's policy, introduced during the pandemic in 2022, to address NPLs in the banking sector.
Last month, the central bank approved a business licence for ARI Asset Management Co (ARI-AMC), a new JV-AMC created by BAM and Government Savings Bank.
BAM is in the process of transferring about 130,000 NPL accounts, worth a total of 11 billion baht, to the new JV-AMC.
