Sunday, December 10, 2023
HomethailandgeneralLocal banks consider regional expansion

Local banks consider regional expansion

Large local banks are mulling regional expansion next year because of high growth potential.

Chaiyarit Anuchitworawong, senior executive vice-president of Bangkok Bank (BBL), said the bank is monitoring the high growth potential of India’s economy, driven by robust domestic demand.

“India will become the growth engine for the world in the coming years,” he said.

However, BBL’s international banking business mainly focuses on corporate, therefore the bank has no plans to expand its business to the subcontinent at present, said Mr Chaiyarit.

“Despite strong growth in India, expansion there is not in line with the bank’s business strategy. The bank will continue tracking opportunities in the country,” he said.

“Existing regional networks contribute good earnings for the bank’s international business.”

BBL, Thailand’s largest lender by total assets and the sixth-largest bank in Asean, is the country’s dominant international banking business with more than 300 branches in 14 markets worldwide.

The bank has a presence in nine of the 10 Asean countries, excluding Brunei. International banking represents around 25% of the bank’s total loan portfolio.

Though there are great opportunities, especially in regional markets as the Asean economy grows, BBL’s international banking business did not set an aggressive growth target and will remain focused on sustainable growth and asset quality, said Mr Chaiyarit.

Given strong risk management, the bank expects to maintain its loan portfolio for international banking business at the existing level of 25% for the long term.

Income growth for international banking is expected to total 10% this year and next, he said.

In 2024, BBL’s revenue for the segment would largely stem from Indonesia, Vietnam and China, said Mr Chaiyarit.

The loan portfolio of its Indonesian subsidiary, Permata Bank, represents 50% of total outstanding loans for the international business.

Vietnam’s economy and exports are expected to improve next year, in line with the global economy, he said.

With the China+1 strategy, foreign investors complement their core China operations with investment in another country to lower costs, diversify risk and access new markets.

Under this scenario, Asean is a key destination for foreign direct investment and provides the bank with more opportunities in the region, said Mr Chaiyarit.

Normally international loan growth averages 4-5% per year, he said.

Kasikornbank (KBank), Thailand’s second-largest lender, opened a new branch in Beijing, its fifth branch in China, to strengthen its regional service capabilities.

Focusing on businesses engaging in trade and investment between Thailand and China, KBank aims to extend its coverage to other Asean countries to connect regional economies, said co-president Pipit Aneaknithi.

The bank also wants to leverage its digital technology to deliver services and offer digital banking platforms through a vast service network in key strategic markets, Mr Pipit said.

KBank targets generating more than 5 billion baht from its China business within three years, he said.

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