Non-interest gains up after Phatra merge
After merging with Phatra Capital in the third quarter last year, Kiatnakin Bank's non-interest business will become a significant income contributor to the group.
Apinant Klewpatinond, who became chairman and president last Friday, said yesterday that the bank's income structure would change because it would realise full revenue from Phatra Capital.
Last year, the bank's non-interest income accounted for 25 per cent of the Bt10.40-billion total and interest income for 75 per cent.
Before merging with Kiatnakin Bank, Phatra Capital reported revenue of Bt2.5 billion. Since the merger, its revenue has been included with Kiatnakin Bank's for 111 days, boosting the bank's non-interest income by 60 per cent.
The group's capital-market business now consists of Phatra Capital, Phatra Securities, Kiatnakin Securities and Kiatnakin Fund Management.
Private wealth management is another focus for fee income.
Adding Phatra Capital's assets under management of Bt200 billion to Kiatnakin Bank's Bt200 billion results in Bt400 billion of AUM of the bank.
The bank plans to cross-sell products to Phatra customers.
Even though revenue from the capital-markets business is more volatile than banking revenue, the strong base in investment-banking and principal investment business of Phatra Capital will support the bank's commercial loans under advisory-linked financing. Commercial loans will take the lead in growth this year instead of retail loans.
The bank targets expansion of commercial loans at 34 per cent and retail loans at 16 per cent.
The bank will not aggressively chase loans this year in line with the phase of the business cycle. In particular, the retail segment is likely to be riskier.
Auto loans, the major constituent of the retail-lending portfolio, are expected to rise by 15-16 per cent this year, slowing down from 26 per cent in last year.
"We have to more cautious about retail lending especially regarding disposable income because the first-car scheme has had an impact on the ability to service debt, " Apinant said.
Kiatnakin Bank financed about 20,000 vehicle purchases under the government's first-car tax-rebate scheme, which is low among major providers of instalment loans, he added. Chavalit Chindavanig, head of finance and budget, said significant fee-based income would make net profit this year also grow significantly.
It is estimated that the focus on commercial lending will change |the loan-portfolio breakdown to 76 per cent retail and 24 per cent commercial.
Based on growth of gross domestic product of 4-5 per cent and the Bank of Thailand's policy rate of 2.75 per cent,
Kiatnakin Bank expects its net interest margin might thin to 3.7 per cent this year from 3.9 per cent because the focus on commercial lending will pull down yields.