Kiatnakin Phatra Financial Group, a holding company of Kiatnakin Phatra Bank (KKP), aims to slow down total loan growth for this year to handle the higher risk of rising financial costs and the global recession.
Aphinant Klewpatinond, the group's chief executive, said KKP has set total loan growth for 2023 at 13%, down from last year's 21.4% tally.
The lower loan growth target is mainly due to the higher risk of high inflation, rising interest rates and the global recession, which will have a wide impact on all customer groups and credit quality.
The bank also expects that its 2023 credit cost will increase to 2.2% from 2.1% last year, he said.
With the upward trend in interest rates, the bank's financial costs would increase. However, the bank cannot pass on all of the higher financial cost to customers amid the uneven economic recovery. So, the higher financial costs would create higher credit risk for the bank, Mr Aphinant said.
Under the scenario, KKP plans to diversify its portfolio to several financial services, covering both money and capital markets, and search for new S-curve businesses. With these strategies, the bank expects to show improved income and better diversify its risk.
The bank aims to trim its non-performing loan (NPL) ratio to 3.1% at the end of this year from 3.3% last year, Mr Aphinanat said.
The bank's president Philip Chen Chong Tan said KKP would focus on auto refinance loans and a digital financial platform as its new S-curve and high yield businesses.
The bank has expanded into the auto refinance loan business which contributes 10% of total car hire-purchase loans. It aims to increase this contribution to 30% in the next 3-5 years.
For its digital financial platform, Dime, covering both banking and investment services, the bank will concentrate on the mass affluent customer segment who have average investment amount of 100,000 baht.
Dime, which was launched last year, has around 100,000 users, of which 40,000 have opened investment accounts with the platform.
KKP has also partnered with True Money to offer digital saving and digital loan. Presently, there are around 100,000 applications per month for the digital loan products.
The loan application still requires a financial statement from the borrowers, in line with its strong risk management basis. Therefore, the loan approval rate is not at a high level. Normally, the KKP approval rate for a personal loan is around 20% of total applications.
For the retail banking business, KKP is still focused on secured loan products, including auto and mortgage loans, which represents 92% of the total retail loan portfolio, according to Mr Chen.
