Bangkok Bank, the nation's largest commercial bank, plans to revamp its retail banking business to build brand awareness and increase its competitiveness in that market.
At an analysts’ meeting yesterday, the bank’s executives said it aimed to revamp especially its consumer products, the credit-approval process and brand image. Retail loans account for 10-11 per cent of its total portfolio.
Phillip Securities said in a research note that Bangkok Bank was falling behind its retail-lending target because its image was not sufficient to induce customer awareness. The bank last quarter also witnessed lower loan demand from international customers as they became more cautious about the economy in China.
The securities house believes the bank can achieve its retail-growth target of 8 per cent because loans in the first nine months were up by 6.1 per cent.
Trinity Securities noted that even though loan growth last quarter was expected to reach 2.5 per cent, the key drivers remained corporations and small and medium-sized enterprises. Retail banking is not performing as the bank had expected because consumers are not familiar with its retail products. The fuzzy brand awareness has also held back fee-income growth.
Last quarter, Bangkok Bank furiously chased deposits by launching campaigns with higher interest rates, as it wants to protect its liquidity and loans. Analysts expect this will push down the bank’s net interest margin (NIM) in the quarter by about 5-7 basis points.
Trinity Securities said in its research note that it expected the bank’s NIM to shrink by 5 basis points to 2.52 per cent because of the higher cost of funds, while interest income from lending is flat.
Bualuang Securities expects the bank’s NIM in the third quarter to narrow by 5-10 basis points from the previous quarter because of the aggressive deposit-mobilisation programme. Its deposits rose by 5 per cent from the second quarter and its loan-to-deposit ratio (L/D) dropped below 90 per cent from 92.5 per cent at the end of June. However, the brokerage expects the NIM will rise in the current fourth quarter in line with stronger loan growth.
The bank is targeting its NIM this year at 2.6-2.65 per cent.
Asia Plus Securities expects the bank’s NIM will contract by 7 basis points to 2.46 per cent and stabilise or shrivel even more this quarter from the hard-selling deposit promotion. Bangkok Bank plans to keep its L/D ratio at 85-90 per cent.
The Asia Plus analyst warns that the weak NIM might hurt the bank’s net profit this year.
Krungsri Securities believes that the bank’s loan growth in the third quarter will be lowest of any quarter this year because of the huge loan repayments of corporate clients. Loans in the third quarter could expand by 0.5 per cent from the second, so loans in the first nine months will grow by 5.4 per cent from the end of last year.
Krungsri Securities has lowered its projection for the bank’s loan growth by 3 percentage points to 8 per cent.
Last week, Chartsiri Sophonpanich, president of Bangkok Bank, told reporters that it was confident of attaining its loan-growth target of 8 per cent because the fourth quarter is the high season for credit demand.