April 04, 2014 00:00 By Sucheera Pinijparakarn The Na
Targets Bt1 bn in loans to segment this year
Kasikornbank aims to extend Bt1 billion in loans to franchisees this year, up from Bt700 million last year, as those customers are low risk.
Patchara Samalapa, executive vice president of KBank, said yesterday that the franchise business was suitable for entrepreneurs who want to start a business but have no marketing plan.
KBank has found that small-business customers with less than three years of experience are risky. The NPLs of those customers run at 11 per cent of the Bt300 million in the start-up portfolio.
When K-SME Franchise was launched four years ago, this category was only Bt1.3 billion of the Bt500-billion loan portfolio for small and medium-sized enterprises.
“Since granting loans to franchisees, we don’t have NPLs from these customers, which are a low-risk business along with support from franchisers. KBank can boost the portfolio from this segment even though credit lines to franchisees are small,” he said.
Franchisees are expected to increase because new graduates want to own a business. Urbanisation also opens opportunities for new franchisees.
KBank in cooperation with the Franchise and Licence Association, Commerce Ministry and Thai Chamber of Commerce has organised a series of activities including business consultations and financial programmes to lure start-up enterprises and people who want to be a franchisee.
KBank offers many financial packages such as loans without collateral and special interest rates.
According to the association, there are about 80,000 franchisees worth Bt168 billion and the value in three years will increase to more than Bt200 billion.
Besides the franchise business, KBank’s SME division will focus on the supply chain and agricultural segments to achieve the new-loan growth target of 6-8 per cent this year.
The old target was 9-11 per cent, but it was revised down in line with declining credit demand and Kasikorn Research Centre’s new forecast of 2-percent growth in gross domestic product.
In the first three months of this year, SME loans saw no growth because more existing loans were repaid than new borrowing required by SMEs because of the political uncertainty.
Yesterday the bank also celebrated the success of surpassing 3 million subscribers to its SMS Transaction Alert service, which ensures customers that their deposit account is safe via notification of all account transactions via text messages to their mobile phones.
For this year, KBank expects to expand this customer base by 50 per cent.