Ms. Kattiya Indaravijaya, KBank Chief Executive Officer, noted that the Thai economy in 2022 remains on a recovery path with brighter growth prospects than what was seen last year. The economic improvement has been continually buoyed by exports and a gradual rebound in the tourism sector as well as the government's stimulus measures - likely to be the main growth impetus. Nonetheless, the overall Thai economy remains mired in uncertainties amid the spread of the Omicron variant of COVID-19 and rising inflation. Given this economic context and numerous present challenges, KBank has announced financial targets for 2022 as follows.
- Loan Growth: 6-8%. Loans increase from retail and SME lending, by focusing on offering credit products via digital channel along with using effective data analytics capability, working with partners, and ongoing regional expansion strategy, while the Bank continues to provide assistance to customers affected by the COVID-19 situation. The Bank expects retail loan growth at 9-11%, while expects SME loan growth at 4-6% and Corporate loan growth at 1-3%
- NIM: 3.15-3.30%, in line with interest rate outlook.
- Net Fee Income Growth: Flat growth, from lower conventional transaction fees, mainly caused by changing consumer behavior, and relatively large net fee income base in 2021.
- Cost to Income Ratio: Low to Mid-40s, as a result of revenue growing in line with a mild economic recovery, with higher potential investment expenses for future growth. Thus, the Bank continues to focus on cost management and productivity improvement.
- NPL Ratio (Gross): 3.7-4.0%. COVID-19 impacts asset quality. However, the Bank adopts a proactive asset quality management and continuously utilizing effective data analytics to monitor asset quality. The Bank expects that asset quality will slowly recover, in line with mild economic recovery.
- Credit Cost: Up to 160 bps. The Bank continues to use prudent policy for expected credit loss (ECL).
Ms. Kattiya added, "In 2022, KBank will continue to operate business in line with the principles of a Bank of Sustainability, emphasizing its commitment to empowering every customer's life and business. Along with this, we will focus on customer support to ensure that they can emerge from the COVID-19 crisis amid the Thai economic recovery and will eventually continue their business operation in the 'new normal' environment. KBank has established three major pillars of our work, namely, business operation under environmental, social and governance (ESG) principles, the creation of a strong brand, and enhancement of business competitiveness capabilities beyond banking and innovation, with the aim of expanding business and offering services that are in alignment with the changing technologies, consumer behaviors and environment, in a timely manner." In 2022, KBank will continue with its strategies to achieve business growth and meet customers' needs, as follows:
- Dominate digital payment across all platforms with the aim of embedding in customers' ecosystems: Focus is on development of payment innovations to comprehensively meet the needs of business and retail customers with enhanced security and reliability. We also leverage data analytics to gain insights for the appropriate delivery of products and services.
- Reimagine commercial and consumer Lending: We have conducted data analytics based on financial transaction data of its customers and counterparties within business chains in order to acquire customers with sound debt servicing ability who are interested in borrowingand offer products that meet their needs through appropriate channels. We have introduced digital lending with the aim of expanding low-income retail customers while also considering risk-based pricing to ensure cost effectiveness and enhanced risk management efficiency.
- 3. Democratize investment and insurance targeting previously inaccessible groups: To serve its business and high net worth individual clients, Relationship Managers (RMs) are always on hand to provide advisory services. For low-income retail customers, KBank has developed investment platforms to facilitate them in making informed decisions from the perspective of cost-effectiveness.
- Penetrate regional market to access customers in other AEC+3 countries through three strategic plays: 1) Aggressive Play in order to expand loan products to corporate customers through regional connectivity; 2) Mass Acquisition Play that aims to expand its customer base via collaboration with its partner banks in the People's Republic of China; and 3) Disruptive Play through development of technological infrastructure to accommodate its venture into the digital lending space. KBank is targeting an increase in the share of its offshore business income to 5 percent of total income by 2023.
- Strengthen harmonized sales and service experience: By seamlessly integrating all service channels of KBank into those of its partners, customers can conduct transactions anytime, anywhere with its sales and service formats that are suited to each customer's demand.
- Improve Value-Based Productivity: We focus on optimizing human resources, data, financial and technological capabilities to improve value-based productivity.
As technology, consumer behaviors and the competitive environment evolve, we must prioritize our key strategy of "Being where customers are" to achieve customer responsiveness. To this end, we will focus on orchestrating ecosystems with our partners with a plan to foster new collaboration so as to broaden our customer base, especially low-income retail customers - a group previously considered inaccessible - while also expanding high-yield financial services.
Additionally, the COVID-19 pandemic of the past two years has substantially affected consumers' debt servicing ability, particularly unsecured loans. KBank recognizes the importance of addressing such an issue and has plans in place to collaborate with its partners for improved capacity in debt management and collection in the future.
KBank operates its business to achieve sustainable growth. It also strives to develop innovations that can better meet customers' needs beyond financial services such as promoting R&D programs to support green business. Such programs can be implemented in the real world as seen from the launch of an environmentally friendly EV bike rental project. Regarding the provision of digital asset services, KBank has set up Kubix Digital Asset Co., Ltd. (Kubix) to provide the ICO portal business via blockchain.
Meanwhile, we aim to elevate our long-term competitiveness through the eight transformation journeys as follows:
(1) Ecosystem Partnership & Harmonized Channel: Orchestrating ecosystems with partners and providing excellent experiences throughout customer journeys; (2) Intelligent Lending: Leveraging customer data to offer a personalized lending experience and achieve fair, risk-adjusted returns; (3) Proactive Risk & Compliance Management: Proactively identifying potential risks and establishing loss prevention and detection; (4) Regional Payment and Settlement; (5) Data Analytics: Expanding data analytics capability to enhance business opportunities and operational efficiency; (6) Cyber Security; (7) Performing Talent and Agile Organization: Developing employee potential in the drive towards an agile organization; and (8) Modern, World-Class Technology Capability: Adopting modern, world-class technology to make KBank the top regional financial service provider
Ms. Kattiya added, "Our integrated efforts will definitely allow KBank to boost our capabilities to the next level, strengthening our long-term competitiveness, while delivering services that completely meet customer demands in the digital age anywhere, anytime. These endeavors have been undertaken in step with the ever-evolving business context and will help to support our customers in adjusting their businesses to the 'new normal' era. Furthermore, our efforts will help to drive Thailand's economy in order to embrace new opportunities, both domestically and within the AEC+3 region, going forward". In addition, while guiding the business down a challenging path, KBank continues to operate business in alignment with its Net Zero Commitment. In parallel, the Bank is committed to supporting Thailand and its clients on their transition to a net zero economy. KBank focuses its efforts not on the environmental aspect alone, but also continually emphasizes the social and governance aspects. All of these endeavors should eventually lead to sustainable returns for all stakeholders over the long term, while allowing us to pass a sustainable society and world on to future generations.