Kasikornbank (KBank) has scaled back its banking business in China because of increased uncertainties stemming from geopolitical tensions and a slowdown in that country's economic growth.
According to chief executive Kattiya Indaravijaya, the bank has cautiously approached business expansion in China, citing rising geopolitical risk, slower GDP growth and heightened competition in the Chinese market. She noted that some multinational corporations have faced obstacles when trying to successfully operate in China.
KBank, the country's third-largest lender by total assets, runs its operations in China through KBank China and has five branches.
Ms Kattiya said the bank still believes in its potential to expand in Southeast Asia, particularly in Vietnam and Indonesia, as there is room to grow in these markets and increase financial inclusion, particularly among underserved groups.
"Digital banking plays a crucial role in expanding financial inclusion in neighbouring countries through our K-Plus platform, in collaboration with local strategic partners," she said.
KBank holds an 84.5% stake in Indonesia's Bank Maspion and operates in Vietnam through the Vietnam branch of KBank. The bank anticipates its World Business Group will account for 5% of total profits in five years.
According to Ms Kattiya, 48% of Indonesia's population and 43% of Vietnam's population are underserved in terms of financial services, providing ample opportunity for expansion in these countries.
KBank supports large local corporations seeking to expand into Southeast Asia's markets, which offer advantages such as high levels of GDP growth, she said. The region's neutrality, especially in the face of rising geopolitical risk, is a positive factor in attracting foreign direct investment, said Ms Kattiya.
The International Monetary Fund predicts Vietnam and Indonesia will post annual GDP growth of 6.4% and 5%, respectively, over the next five years.
A key advantage for both nations is their large and youthful populations. Vietnam has a population of 99 million, while Indonesia has 277 million, with these numbers projected to rise to 107 million and 317 million, respectively, by 2050, further bolstering the region's economic potential.
Vietnam also benefits from a lower minimum wage compared with regional peers, while Indonesia is rich in natural resources, she said. Despite these advantages, the strong competitiveness of local businesses, particularly in the retail sector, poses a challenge to foreign companies, said Ms Kattiya.
Local businesses have strong potential to compete with major international and regional retail giants such as Carrefour, Lotte and 7-Eleven, so Thai companies should be prepared for regional expansion, she said.
