"This year will be difficult due to strong competition, and the market is not growing, as well. Competitive pricing won't be a factor this year, because no one will be much different from the others. We'll all face the same situation of market slow-down, so there will be competitiveness in loan quality control and also how you choose good, new quality customers," Tawatchai said in an interview with The Nation.

With only a 1-per-cent share of the lenders' market, niche-market player Kiatnakin Bank has chosen to be "small but beautiful", with moderate growth and an expertise in car leasing. One year and four months after upgrading from a finance company to a bank, it has kept its key business model unchanged.

"We won't grow too fast over the next three or four years. We'll focus on boosting our expertise. Our business model won't change. It suits us to have a market share of 1 per cent of the financial system. We plan to access customers that others have ignored and choose only a few things to do," Tawatchai said.

This year will be a "maintaining year" for the bank, which plans to grow by only 13-17 per cent, compared with its normal annual rate of 20 per cent. Car leasing alone is expected to grow about 30 per cent - around the same level as in each of the previous two years - from Bt30 billion at present to Bt40 billion by year's end.

At the end of last year, Kiatnakin Bank's non-performing loans stood at 14.5 per cent of total loans, far higher than the banking industry's average of less than 5 per cent. The bank's total lending portfolio was Bt68 billion, of which Bt52 billion was in car leasing, representing 160,000-170,000 customers.

"We would like our [percentage of] NPLs [to total loans] to fall into the single digits, but I don't know whether we can do that this year," said Tawatchai.

Growth in another of the bank's key businesses - property loans for land developers - will also be flat this year, similar to the past three years, when its property loan portfolio hovered at Bt13 billion to Bt15 billion.

Tawatchai said signs of oversupply had been showing in the property market over the past two years, although the increase in supply had recently slowed down. There are 200 land development projects in the bank's portfolio. The NPLs in its property-loan portfolio are as high as 25 per cent, although Tawatchai believes these debtors are good customers, and the bank will try to help them survive the economic slow-down.

As of the end of last year, bad loans purchased by the bank from other financial institutions, including the Financial Sector Restructuring Authority in the wake of the 1997 financial crisis, amounted to Bt8.9 billion. Most of them are in the court process.

Thitinan Wattanavekin, head of treasury and funding at Kiatnakin Bank, said that at one time, the bank had helped establish an asset-management company, but that proved to be a bad choice. Now, it has chosen to become a selling agent for more than 30 asset-management funds.

Jiwamol Kanoksilp,

Oranan Paweewun

The Nation