Kiatnakin Bank (KKP) will resume its aggressive loan growth this year with a target of 15 per cent by penetrating new loan areas such as personal loans and small and medium sized business loans (SMEs)
Aphinant Klewpatinond, chief executive officer and president of the bank, said that the year 2016 will an aggressive one for KKP, growing in all sectors after witnessing an overall drop in loans for two consecutive years.
At the end of last year, its loan portfolio was reported at Bt178 billion, dropping by 3.6 per cent from Bt184.63 billion in 2014 and Bt190.54 billion in 2013.
Last year. hire purchase, which is method of buying goods on an instalment plan over time, was a major loan portfolio that faced a drop of 6.4 per cent. Meanwhile, commercial loans, mainly from project finance to medium sized property developers witnessed a drop of 3.8 per cent year on the year.
To branch out in a new loan segment is to reduce dependence on hire purchase and project finance to small and medium sized property developers.
KKP has the highest non-performing loans (NPLs) among its peers at 5.8 per cent from hire purchase and project finance to medium sized property developers. Yet, the latest trend of NPL is better when compared to the 6.6 per cent in the third quarter of last year. The situation of NPLs in hire purchase were believed to have bottomed out. Yet, surprisingly vehicle sales in Thailand this year are brighter than last year, as people are usually more cautious when buying high priced goods amid the economic slowdown.
The bank, therefore, plans to build a new growth engine from personal loan and SME programmes.
The bank said they are setting up a new direct sales department with an initial sales staff of 300 to acquire personal loan customers who have monthly incomes of 40,000-Bt50,000.
"We will penetrate Bangkok and nearby provinces and target loans totalling Bt10 billion within 2-3 years," he said.
Earlier, the bank offered personal loans to regular hire purchase customers who the bank had dealt with previously, and had personal loan totals currently at around Bt2 billion.
Last year, KKP tested the personal loan market with Lombard multipurpose loans offered to high-net-worth customers with assets of Bt30 million and offered through Phatra Securities. The borrowers had to hold cash, securities, property funds or infrastructure funds as collateral to qualify for these loans.
For the SMEs sector, the bank has targeted enterprises with a credit line of no more than Bt10 million, which is a new area for the bank, after the bank previously tapped SMEs with a credit line of Bt100 million, he said.
We didn't have small sized SMEs before, so to develop this area we use direct sales and telemarketing. Moreover, we have adjusted risk management because we need to be cautious when stepping into this category. Loan products to SMEs will be officially introduced next month," said Aphinant.
Loan portfolios will be more balanced after expanding into the new loan area, and hire purchase loans within 3 years will be 50 per cent of the total loan portfolio from the current 65 per cent.