June 11, 2014 00:00 By Sucheera Pinijparakarn
Kasikornbank aims to expand its middle-income customer base and share of the upcountry market, in order to strengthen fee income from bancassurance business and retail banking in the long run.
Middle-income individuals form an attractive potential segment for bancassurance because there are roughly 12 million of them around the country, executive vice president Pakorn Partanapat said yesterday.
Some 5 million of them are already KBank customers, with around 1 million having purchased life insurance with the bank.
Middle-income individuals are defined as those with monthly income of Bt15,000 or deposits of up to Bt10 million with the bank.
Bancassurance generates 29 per cent of fee income to KBank’s retail banking, second only to transactional banking, which contributes 33 per cent.
Provincial customers account for 40 per cent of the bank’s overall retail customer base, but it wants to increase this proportion to 50 per cent in the next few years to bring it more in line with provincial gross domestic product, which currently contributes of 60 per cent of the Kingdom’s GDP, he said.
The provincial market presently contributes fee income of 20 per cent against 10 per cent from customers in Bangkok, which makes it a good potential sector for KBank, he added.
He said the Bangkok market still offered room for growth, however, because of a greater wallet size in terms of business activity and the number of wealthy people.
The bank therefore anticipates a 50:50 income-contribution split within the next two to three years, said the executive.
Tying in with the strategy of broadening its customer base upcountry, the bank will open 170 branches around the country this year, bringing the total to 1,145.
Most of the new branches will be in the provinces, as it wants to acquire an additional 3.3 million customers this year.
Around 500,000 of the new customers will be middle-income individuals, of which 400,000 will be K-bancassurance customers.
According to the bank’s data, middle-income people prefer buying short-term life insurance with a high return and tax saving.
KBank, in cooperation with Muang Thai Life Assurance, has therefore designed a new savings insurance product called “Super Saving Life Insurance” (Pro Saving 5/10) to offer to this category of customers, said Pakorn.
In the first four months of the year, K-bancassurance received new business of Bt8.6 billion, up 34 per cent year on year, and total premiums of Bt16.5 billion – 30 per cent higher than in the same period last year.
He said the bank remained confident of achieving its new-business target of Bt24 billion for bancassurance and total premiums of Bt47 billion this year, after expanding its upcountry customer base and seeing the positive impact on consumer confidence of the calmer political situation.
Meanwhile, loan growth and fee income in the first four months of the year were also on target, at 6-9 per cent and 20-23 per cent, respectively.