March 27, 2014 00:00
By SUCHEERA PINIJPARAKARN
BANK OF Ayudhya's strategy for its wealth-management unit will focus on managing the cost of funds and providing investment options reinforcing wealth to middle-income and wealthy customers during these times of economic frailty.
Kris Chantanotoke, executive vice president of Krungsri, said yesterday that the bank had to adapt its wealth-management strategy to be in line with the investment options of Thais who look for products beyond deposits. The changing global market is also influencing investment decisions.
Thailand is shifting to a market-based economy from a bank-based one, and people upcountry have higher income than in the past, so investment products must become more varied.
Krungsri has to become a one-stop provider of equities, stocks, insurance products and mutual funds to its middle-income and wealthy customers.
The arrival of Bank of Tokyo-Mitsubishi UJG as the strategic shareholder will broaden Krungsri’s line-up of wealth products because BTMU, besides referring the payroll accounts of Japanese companies in Thailand, will also introduce its partly owned partner Morgan Stanley, which can help Krungsri to offer global research to middle-income customers though Plan Your Money and wealth customers through Krungsri Exclusive.
The integration with BTMU, which will be completed this year, will help Krungsri adjust its cost of funds because of a change in its portfolio mix towards corporate customers. At present Krungsri’s loan portfolio leans towards retail accounts.
Krungsri plans to lower its cost of deposits from more than 2 per cent to 2 per cent within two years in line with the banking industry.
It will make it more convenient to cross-sell insurance products. Branch staff will be trained in risk assessment before offering insurance policies to customers.
Mutual funds are key products of the wealth-management division. Krungsri will emphasise foreign funds invested in the developed economies and North Asia, as those markets are recovering and yield higher returns than the domestic market.
Krungsri targets its assets under management at Bt350 billion this year, up from Bt320 billion. Most of the AUM belong to Krungsri Exclusive customers, who have assets worth more than Bt5 million each.
The AUM of middle-income customers will take time to grow because the bank just launched the Plan Your Money service for them. However, the bank aims for about 20 per cent of the 100 customers who receive advice from financial planners under Plan Your Money to invest in products under Krungsri Group.
Amid the political unrest, wealthy customers whose investment portfolio is heavily weighted in equities have witnessed a lower return.
The bank suggests to customers who dare to take on high risk to invest in fixed-income securities in the global market, especially in North Asia and some markets in Europe.
“Around 10 per cent of our customer base has moved to invest as we suggested. The ratio is still small because Thais are still afraid of investing in foreign funds,” Kris said.
Thai equities will still be an interesting investment in the long term because Thailand has good fundamentals and when the political crisis is over, the Thai equity market will still be attractive to domestic and foreign investors, he said.