Kiatnakin Bank (KKP) aims to penetrate the corporate loan segment to support its mission as a "financial solution expert", targeting to provide new commercial lending of 33.5 billion baht this year.
Sammit Sakulwira, head of commercial lending for KKP, said the average yield of commercial lending may narrow as the bank plans to use a pricing strategy that offers competitive interest rates to penetrate the large corporate segment. The smaller yield will be offset by improved quality in the lending portfolio.
Net commercial loan growth is projected to expand by 5% this year.
To meet its growth target, KKP must provide new commercial lending of 33.5 billion baht to compensate for loan repayment, which is around 18 billion annually, said Mr Sammit.
He said the bank's average business lending term stands around three years for real estate, logistics, and machinery loans, while the term is seven years for apartment and hotel lending.
"I accept that pricing must be used to [attract] large corporates in initial stages, but for the next step we will focus on flexibility and fast loan approval for property purchase," said Mr Sammit, adding that even though the pricing strategy is being implemented, the bank has never offered loans below the cost of funding.
The bank plans to be an expert in real estate and aims to penetrate business owners in this segment and high net worth customers in order to expand lending from existing customers, which comprise small and medium-sized enterprises, he said.
He said the bank guarantees construction and property as loan categories where the bank has expertise, while it is expected that this segment will grow this year in line with greater public investment projects.
"These strategies will support our mission to become a financial solutions expert," said Mr Sammit.
Previously, KKP was keen on the SME segment, but decided to enter the large corporate segment in the middle of last year on the back of potential growth prospects.
The bank reported a 73% growth in total new commercial lending last year, valued at 46.5 billion baht, up from 26.9 billion logged a year earlier. Commercial loans outstanding at the end of last year stood at 44.28 billion baht, up 7% year-on-year.
Mr Sammit said a jump in commercial loan growth was sparked by the bank's entrance into the loan segment for major real estate firms such as LPN Development Plc, Quality Houses Plc, AP (Thailand) Plc, and Pruksa Holding Plc.
KKP shares closed yesterday on the SET at 81 baht, up 1.75 baht, in trade worth 268.7 million baht.
