Banks ready retail tactics amid fear personal debt levels too high
While the banks are bullish on retail lending, the industry is being challenged over rising levels of household debt and has been urged to tone down advertising seen as influencing people to borrow too much.Most banks say they are aware of this warning by the Bank of Thailand and will make their adverts less aggressive if they are persuading people to get too much in debt.
Bank of Ayudhya, a major player in retail banking through the Krungsri Consumer brand, expects retail loan growth this year to return to a normal level of 12-15 per cent, after lending was accelerated in 2012 by the recovery from the previous year's flood disaster.
Thakorn Piyapan, managing director of Krungsri Consumer, said the bank would temper its advertising and prepare for economic volatility.
"We have to have new channels to attract consumers, but pricing is not our strategy. To win the hearts of clients, customer relationship management is important because it will help the bank know what it should provide to meet customer requirements."
He said the robust growth of the auto sector last year would spur the demand for auto accessories and personal loans in 2013, while the upcoming expansion of third-generation cellular service would drive instalment loans for smart phones.
Krungsri Consumer aims to sustain its growth at 12-15 per cent in line with these market realities.
Weidt Nuchjalearn, senior executive vice president of Krungthai Bank, said its key strategy for growth in retail banking was fee-based income because high competition in retail lending would affect net interest margin (NIM).
KTB has 18 million customers across the country but most are familiar only with deposits and withdrawals. The bank will strongly promote its bill-payment services to increase fee income.
The bank plans to persuade existing customers to increase their product holdings to an average of four from three currently. This will double the growth of fee income, he said.
Weidt said high household debt would not hurt loan growth if banks had efficient information-technology systems to check the credit of consumers and avoid non-performing loans.
Bangkok Bank, the country's largest, will be active in retail banking this year as it has learned that this sector is bringing in fee income and high NIM.
However, consumers are not familiar with its retail products. The bank will revamp its retail banking and reinforce brand awareness.
The bank's president, Chartsiri Sophonpanich, said retail banking would be in its spotlight, as housing loans and credit cards are two of its key products.
Krungthai Bank will strengthen its brand awareness among private customers as a key strategy this year, as their number must be increased by 1.5 to two times, said bank president Vorapak Tanyawong.