KBank keeps vow to customers

Despite abundant challenges, Kasikornbank (KBank), Thailand’s third-largest lender by total assets, remains committed to supporting vulnerable clients in managing their debt throughout the lifetime of their loans.
Cautious approach
In an exclusive interview with the Bangkok Post, Rungruang Sukkirdkijpiboon, the bank’s co-president, said KBank has expanded its retail loan portfolio appropriately this year, aligning with the Thai economic environment.
The country’s uneven economic recovery, high level of household debt and sluggish income growth have weakened the ability of many households to repay debt, he said.
According to Mr Rungruang, KBank is concerned about the asset quality of certain customer segments, especially those defined as vulnerable.
The bank is focusing more on supporting existing clients than on aggressively expanding new loans, while exercising caution in growing its loan portfolio, he said.
“We aim to ensure that our customers do not feel burdened by their debt,” said Mr Rungruang.
“It’s essential for us to verify that loan applicants have the capacity to repay their debts before approving loans.”
The debt-servicing ability of the bank’s retail customers varies, ranging from strong to neutral to weak, depending on the growth of each individual’s income. He describes this ability as going through a cautious phase, requiring monitoring by the bank.
With the country’s household debt hovering around 90% of GDP, Mr Rungruang said there are two strategies to address this issue and reduce the household debt-to-GDP ratio: increase household income or slow the growth of consumer loans.
KBank favours the first option, he said.
Income Stagnation
When it comes to key consumer products — mortgages, auto loans, credit cards and personal loans — KBank has prioritised secured loan products such as housing and auto loans to strengthen its retail banking business, said Mr Rungruang.
Selective growth remains the bank’s core strategy to drive secured loan growth. Amidst several challenges, KBank is seeking opportunities in niche businesses while shifting focus to higher-income customers, he said.
Many prospective homebuyers and car buyers have marginal income growth, leading to loan application rejections, even as KBank insists it is maintaining consistent lending criteria, said Mr Rungruang.
Some applicants are unable to qualify for KBank loans because of insufficient debt servicing capacity, even though the bank has not tightened its loan conditions, he said.
Existing clients are also showing signs of weaker repayment capability as income growth lags, noted the bank.
For instance, a mortgage customer with a steady monthly income of 30,000 baht may struggle to reduce their principal loan balance because of higher interest rates, under a step-up mortgage scheme.
This results in reduced repayment capacity, despite an unchanged level of income.
“Banks typically assess loan applicants based on their ability to repay, and they evaluate income stability over the life of the loan,” said Mr Rungruang.
The younger generation and first-time workers, which are new to credit schemes, are key targets for the bank to drive consumer loan growth, he said.
However, the bank prioritises its existing depositors who have an established transaction history, allowing for projection of their financial behaviour and discipline.
On average, customers in the bank’s retail loan portfolio earn around 20,000 baht per month.
Moderate Growth
Mortgages typically make up the largest portion of retail banking portfolios at major banks. KBank holds the third-largest share of the housing loan market, with a portfolio valued at roughly 400 billion baht.
“Not being the market leader in housing loans provides KBank with greater flexibility in selecting business segments under its selective growth strategy,” said Mr Rungruang.
In the auto and personal loan markets, KBank plays a smaller role, but still offers services to meet the needs of its customer base, he said.
However, KBank leads the credit card market with a 19.6% share of total card spending.
In addition to individual cardholders, the bank also provides credit cards to small and medium-sized enterprises (SMEs) and entrepreneurs, leveraging its strong SME loan portfolio.
Entrepreneurs primarily use KBank credit cards for transactional banking services rather than its loan features.
Notably, around 60% of KBank’s 2.4 million credit cardholders pay their balance in full each month.
The bank keeps a close watch on this segment to maintain asset quality.
KBank set conservative loan growth targets for 2024, focusing on maintaining asset quality and supporting existing customers rather than pursuing aggressive growth, in line with the economic environment.
For 2025, both total loan and retail loan growth will likely align with Thai GDP growth, according to the bank.
“Retail loan growth next year is projected at 2-3%, and it will be challenging to exceed GDP growth,” said Mr Rungruang, who joined the bank about a year ago.
“KBank is confident in our strengths and is ready to accelerate growth when the economic cycle improves.”
He highlighted the advantages of KBank’s retail banking business, including the strong network, talented workforce and supportive organisational culture.
However, Mr Rungruang acknowledged that some internal operational processes require further strengthening.
KBank posted a year-on-year growth rate of 1.56% for the first half of the year, short of its total loan growth target of 3-5% for 2024.
The shortfall was attributed to a decline in SME loans, credit card loans and personal loans, while corporate and home loans grew.
KBank’s gross non-performing loan ratio was 3.18% as of June this year, while the bank wants to keep bad debt below 3.25% by year-end.