Introduction of a bank rating system.
This is how Krungthai Bank's new president, Vorapak Tanyawong, will make the bank the most profitable in the industry.
"KTB has an advantage in assets, larger network and larger customer base, but our earnings are lower than the three major banks," he said.
The bank should pay more attention to capital adequacy, assets quality, management, earnings and liquidity (CAMEL), said Vorapak, who has worked for several international banks.
The keys to greater profitability are improving the non-performing-loan ratio, boosting non-interest income and bringing the loan loss provision down to a normal level.
KTB has room to grow in the markets for small and medium-sized enterprises and retail, not only for lending but also for generating fee-based income, as those markets tend to use more non-interest products and services.
"The bank will give importance to fee-based income in lending and consumer finance, particularly from wealthy customers because when we help manage the finances of customers, we should get fees from them as well," he said.
Cross-selling products to borrowers is one of his spotlights.
KTB earns annual fee income of Bt20 billion, which lags behind major banks, while loan loss provisioning is running at Bt10 billion per year compared with Bt7 billion to Bt8 billion of major banks.
To improve the earnings of KTB, debt management is important. Vorapak said he would monitor both general-provisioned and special-mention debt through the incorporation of the CAMEL international bank-rating system to ensure the debt burden will not hurt earnings.
KTB's net profit should match those of major banks, which fall in the range of Bt25 billion to Bt35 billion.
Although KTB's branches over there might not expand as much as at other banks, its network in the provinces can support cross-border trade and transactions, Vorapak said.
Vorapak realises that the bank is used to implementing government policies and is willing to support state agencies but said the assistance must be based on the ability of the bank.
"Lending is a science, which can describe the process. … I think politicians now understand better that loans come with risk," he said.
Vorapak said he would rebrand the bank as the government bank of choice, not the bank for the government.
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