Despite facing numerous challenges, Kasikornbank (KBank), the third-largest financial institution in Thailand by total assets, is dedicated to helping vulnerable customers manage their debt throughout the duration of their loans.
Prudent Strategy
In a recent exclusive interview with the Bangkok Post, Rungruang Sukkirdkijpiboon, the bank’s co-president, shared that KBank has expanded its retail loan portfolio judiciously this year, taking into account the current Thai economic landscape.
He noted that the country’s inconsistent economic recovery, high household debt, and slow income growth have diminished many households’ ability to repay their debts.
“KBank is particularly mindful of the asset quality of certain customer segments, especially those classified as vulnerable,” Mr. Rungruang explained. The bank is prioritizing support for existing clients over aggressively pursuing new loans while remaining cautious in its loan portfolio growth. “Our goal is to ensure that our customers do not feel overwhelmed by their debt,” he added. “It’s crucial for us to confirm that loan applicants are capable of meeting their repayment obligations before granting loans.”
The debt repayment capability of KBank’s retail clients varies significantly—from strong to neutral to weak—based on individual income growth. Mr. Rungruang described this situation as being in a cautious phase, necessitating close monitoring by the bank.
With household debt currently around 90% of GDP, he identified two strategies to mitigate this issue and reduce the household debt-to-GDP ratio: either boost household incomes or slow the growth of consumer loans. KBank is inclined towards the former.
Income Challenges
When addressing key consumer products such as mortgages, auto loans, credit cards, and personal loans, KBank has placed a premium on secured loan products like housing and auto loans to reinforce its retail banking operations, according to Mr. Rungruang.
The core strategy focuses on selective growth to drive the expansion of secured loans. Despite various challenges, KBank is targeting niche markets while shifting its focus towards higher-income clientele, he elaborated.
Many potential homebuyers and car buyers are experiencing only marginal income growth, resulting in loan application rejections, even as KBank maintains its consistent lending criteria. “Some applicants are unable to qualify for KBank loans due to insufficient debt repayment capacity, despite the fact that we haven’t tightened our lending conditions,” Mr. Rungruang highlighted.
Existing clients have also begun to show signs of diminished repayment capability as their income growth stagnates, he observed. For example, a mortgage customer earning 30,000 baht a month may find it difficult to reduce their principal loan balance due to rising interest rates under a step-up mortgage scheme, affecting their repayment capacity even though their income remains unchanged.
“Banks typically evaluate loan applicants based on their repayment capabilities and assess the stability of their income throughout the loan’s duration,” explained Mr. Rungruang.
The bank seeks to engage the younger generation and first-time workers—new to credit schemes—as significant targets for consumer loan growth. However, it primarily focuses on existing depositors with established transaction histories, which allow for a more reliable projection of their financial behaviors and discipline.
On average, customers in KBank’s retail loan portfolio earn about 20,000 baht monthly.
Steady Growth
Mortgages often represent the largest segment of retail banking portfolios at major banks. KBank holds the third-largest market share in housing loans, with a portfolio valued at approximately 400 billion baht. “Not being the market leader in housing loans gives KBank greater flexibility in choosing business segments under its selective growth strategy,” Mr. Rungruang stated.
While KBank holds a smaller share in the auto and personal loan markets, it still provides services tailored to its customers’ needs, he added. Notably, KBank leads the credit card market with a 19.6% share of total card spending.
Besides catering to individual cardholders, the bank also offers credit cards to small and medium-sized enterprises (SMEs) and entrepreneurs, utilizing its robust SME loan portfolio. Entrepreneurs mainly use KBank credit cards for transactional banking rather than for loan purposes.
Importantly, around 60% of KBank’s 2.4 million credit cardholders pay off their balances in full each month, prompting the bank to closely monitor this segment to sustain asset quality.
For 2024, KBank has set conservative loan growth targets, concentrating on maintaining asset quality and supporting existing clients rather than aggressively pursuing growth, in response to the economic climate. For 2025, the bank anticipates that both total loan and retail loan growth will likely align with the GDP growth of Thailand.
“Next year, we project retail loan growth at 2-3%, and exceeding GDP growth will be challenging,” Mr. Rungruang commented, having joined the bank approximately a year ago. “KBank is confident in our strengths and is prepared to accelerate growth when the economy improves.”
He emphasized the advantages of KBank’s retail banking operations, such as its extensive network, skilled workforce, and
