Kasikornbank eyes foreign expansion in 2015

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http://asia.nikkei.com/Business/AC/Thai ... on-in-2015


YUKAKO ONO, Nikkei staff writer
BANGKOK -- Preparing for the ASEAN Economic Community (EAC) in 2015, Kasikornbank (KBank), Thailand's fourth largest bank by assets, wants to expand its footprint beyond Thailand, not just in ASEAN but also in China, Japan and South Korea (AEC+3) where investments flows are running in all directions.

KBank restarts operations in Cambodia early next year having closed its sole branch in Phnom Penh around the time of heightened territorial disputes between Thailand and Cambodia in 2008.

Trade between the two ASEAN neighbors has continued to increase, and this is encouraging KBank's return, President Teeranun Srihong told the Nikkei Asian Review on Monday. KBank has also recently established a subsidiary in Laos in order to open a local bank by the end of this year.

KBank has only 16 overseas offices, including the bank in Laos, six branches mainly in China and seven representative offices in China, Japan, Myanmar and Vietnam. Although this is small compared to Bangkok Bank's 28 branches, KBank has cooperative arrangements with 66 banks, mostly in Asia but also Italy and Germany.

"We want to catch up and I believe we can by having a clear vision," said Teeranun.

In China, KBank hopes to upgrade branches to locally incorporated institutions by late 2015. The bank currently operates with a foreign bank license, and has applied to register as a local bank in order to conduct renminbi transactions.

KBank plans to strengthen ties with the 27 regional banks in Japan with which it has partnerships. "We believe that we can make more business with regional banks than the mega banks that have their own banking licenses," Teeranun said. He expects more corporate clients with regional banks will come to Thailand with lending needs as the AEC gathers pace.

In Thailand, KBank sees the economy starting to pick up on the back of heavier government investment. It is targeting a loan growth rate of 8 to 9% compared to the 4.32% seen this year up to the end of September.

Non-performing loans (NPLs) are expected to increase slightly to about 2.25% compared to the 2.16% seen at the end of September.

Teeranun said NPLs have risen in the past few months along with household debt and emerging vulnerabilities in small and medium enterprises. Agricultural businesses, for example, are suffering from low prices for rice and other commodities. Auto sales have also fallen.

The NPL level is not yet alarming compared to other countries, according to Teeranun. "It is not a bad level," he said. "It may not improve -- this could just be the new norm."
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