BAY to keep retail at core of lending portfolio
Whether or not its shareholding structure is changed, Bank of Ayudhya will continue to run with its core business model as the bank's risk-management approach has proved itself amid the current growth in consumer lending.Janice Van Ekeren, chief executive officer of BAY, yesterday insisted that the bank would maintain focus on its core business model, and in particular on retail loans, which account for 49 per cent of its lending portfolio.
US conglomerate General Electric is selling out its shares in the bank. However, the degree of progress in striking deals with potential buyers is unclear.
The bank will expand its retail customer base, especially among currently unbanked people with a monthly income lower than Bt15,000, through its financial units: Krungsri First Choice and Srisawad Ngern Tid Lor.
While lower-income borrowers might be a risk, the bank's risk management has shown that it can keep non-performing loans under control, she said, adding that NPLs from Krungsri First Choice personal loans were now at their lowest level since GE acquired the portfolio.
"Lower-income people should get an opportunity to access sources of funds, and this will not hurt the bank as long as we have good risk management," said the CEO.
BAY president Philip Tan said |the bank had benefited from GE's know-how in regard to the control of bad debt and growth from high-risk products.
The bank's NPL ratio stood at 2.39 per cent at the end of last year, the lowest since 1993, giving it room to expand its lending growth, he said. NPLs are acceptable at 2.5 per cent because the portfolio must be expanded, he added.
BAY this year projects loan growth of 12 per cent, with retail lending including microfinance being the key driver.
Van Ekeren said microfinance could be expanded to neighbouring countries, where potential customers recognise the Krungsri Auto and Sriawad Ngern Tid Lor brands via satellite television.
Krungsri is seeking local banks in Cambodia with which it can form a microfinance business. It hopes to establish such cooperation before the establishment of the Asean Economic Community in 2015, she said.
BAY currently has two branches in Asean, both in Laos.
The bank is also seeking a licence to open a representative office in Myanmar in 2016 to service Thai |corporates that have activities in the country.
Meanwhile, she said the bank was still looking to buy good synergy assets to strengthen its portfolio. The goal |is to sustain profitability and secure| a top-three ranking for return on |equity.
Return on equity this year is targeted at more than 15 per cent, against the 13.5 per cent achieved by the bank last year.
She cited BAY's acquisition of HSBC's credit-card portfolio as a good synergy deal, as it had added value to the bank's Krungsri credit-card operations. BAY is the market leader in credit-card business.