KBank targets double-digit return on equity within 2026

“KBank aims to be a strongly reliable partner for our customers and other stakeholders, and to deliver strong performance for our shareholders in an increasingly unpredictable global economic environment.” MS. Kattiya Indaravijaya, Managing Director of KBank

• “3+1 Strategy” to help KBank grow its business by focusing on three strategic priorities: reinvigorating credit performance, growing low-capital fee income business, and strengthening and innovating sales and service models to deliver value-based results. As the “+1” of its three core strategies, KBank targets new revenue generation in the medium to long term that will contribute approximately 5% to net profit over the next five years.

• The loan will increase by 3-5% in 2024 while enhancing end-to-end transformation to increase credit capabilities for business growth.

• The Mutual Fund Assets Under Management (AUM) of KASIKORN ASSET MANAGEMENT Co., Ltd. (KAsset) will increase by approximately 30-40% by 2026..

• The number of K PLUS users will increase by approximately 20-30% by 2026 and maintain its leading position.

BANGKOK, THAILAND – Media OutReach Newswire – January 26, 2024 –
KBank has adopted a 3+1 strategy which consists of focusing on three priorities to generate sustainable growth, and an additional mission to generate new income in the medium and long term.

MS. Kattiya Indaravijaya, Managing Director of KBanksaid: “KBank aims to be a strongly reliable partner for our customers and other stakeholders, and to deliver strong performance for our shareholders in an increasingly unpredictable global economic environment.

She noted that the Thai economy is expected to grow by around 3% per year over the next three years and in 2024 it is expected to grow by 3.1% with a K-shaped recovery, driven mainly by tourism , exports and public spending. in a context of global economic uncertainty.

Ms. Indaravijaya said: “The banking sector is also expected to face challenges arising from uncertain economic conditions on both domestic and global fronts, and it will seek to keep abreast of changing consumer behavior through service development, as well as to follow the emergence of new financial service providers beyond financial institutions. KBank will implement a plan we have called our “3+1 Strategies” which aims to ensure that banks are well prepared to both withstand and capitalize on these realities and ultimately deliver return on equity double digits by 2026.”

The “3+1 Strategy” will focus KBank on three strategic priorities.

The first strategic priority (reinvigorate credit performance) is to improve the performance of the bank with its credit products. This involves working even closer with good credit customers with greater personalization of service and product offerings, as well as adopting proactive customer loyalty programs for sustained growth. While focusing on quality growth, KBank targets 3-5% loan growth in 2024, while enhancing end-to-end transformation to increase credit capabilities for business growth.

The second strategic priority (scaling low-capital fee-based businesses) is to expand its low-capital commission income business. Chief among these initiatives is to further modernize its wealth advisory activities and offer a comprehensive service capable of meeting the needs of clients throughout their lives. A full range of comprehensive investment products, including mutual funds, bancassurance, etc., offered by KBank and KAsset in collaboration with our partners, will also be offered along with an enhanced sales and service model. All these services will be provided to our customers through comprehensive service points. The bank intends to increase the mutual fund assets under management (AUM) of KASIKORN ASSET MANAGEMENT Co., Ltd. (KAsset) by about 30-40% by 2026. At the end of 2023, assets under management of mutual funds amounted to 924 billion baht.

As part of its second strategic priority, KBank also aims to further strengthen the market leadership position of its highly popular K PLUS mobile banking platform, particularly in the area of ​​digital payment services. thanks to new initiatives that will make it even more popular thanks to its secure, practical and intuitive use in all functionalities.

The third strategic priority (strengthen and innovate sales and service models to deliver value-based results) is to strengthen the bank’s existing platforms and distribution channels as well as create new ones to maximize convenience for customers anytime, anywhere. As part of this, KBank will integrate a leading position in K PLUS with several other platforms and applications as well as physical channels. This effort aims to provide customers with a safe and seamless cross-channel experience. Through these initiatives, KBank expects the number of K PLUS users to increase by approximately 20-30% by 2026, thereby maintaining its leading position. The number of K PLUS users at the end of 2023 was 21.7 million.

Additionally, as the “+1” of its core strategies, KBank will create new revenue through KASIKORN INVESTURE CO., LTD’s investments. (KIV), regional business expansion and the development of solutions that go beyond the banking sector. The contribution of the “+1” of its strategies is estimated at around 5% of net income within five years.

“These strategies are consistent with our priority of selective growth focused on a prudent credit policy and maintaining a level of capital appropriate to the economic environment and, in line with these objectives, the bank has set appropriate financial targets for 2024 “, she added. .

Synergy of three facilitators ‘IT – Data – Human Resources’ to achieve the goals and advance the Thai economy.

Three key enablers for advancing the K-Strategy are: 1)
Modern technology for improving work efficiency and developing innovative services, making KBank the leading regional financial services provider; 2)
Scalable data and analytics serve as comprehensive tools to improve business opportunities and operational efficiencies; and 3)
Performance-driven organization, essential for achievable work plans and measurable results.

Ms. Kattiya added: “KBank is confident that its operations based on the principles of sustainability banking and the “3+1 strategy” will enable the bank to respond to the current circumstances in a timely and balanced manner, strengthen its business foundations . , and provide quality services that meet customer needs, while promoting the career development of employees within the organization. The Bank plans to achieve double-digit return on equity (ROE) by 2026, provide sustainable returns for all stakeholders and contribute to the prosperity of the Thai economy.”

KBank’s 2024 financial targets focus on prudent growth in a difficult economic context.

Under these circumstances, KBank prioritizes prudent growth, focusing on a prudent credit policy and maintaining a level of capital appropriate to the economic direction. The Bank therefore set
its 2024 financial objectives as following:

• Loan growth of 3-5%, reasonable and in line with the economy, focused on increasing quality loans in selective recovering sectors, secured loans and regional expansion strategy; continue to focus on asset quality by revamping credit strategy, reinvigorating key capabilities and improving end-to-end transformation. The Bank is targeting growth in corporate loans of 2-4%, SME loans of 1-2% and retail loans of 1-2%.

• The Net Interest Margin (NIM) maintains, in line with the interest rate trend and selective loan growth, the cost of funding remains high compared to last year’s interest rate hike.

• Net fee income growth improved with mid-to-high single-digit growth, driven by further strategic growth in the wealth management business; despite the decline in conventional transaction fees due to changing consumer behavior.

• The cost-to-income ratio is expected to be between 45 and 45%, with moderate revenue growth; potential investment to support the K-Strategy; continuous cost management and productivity improvement.
  

• NPL ratio (gross) below 3.25%. Stable NPL ratio in a context of uncertain economic recovery.

• The cost of credit is expected to be between 175 and 195 basis points, with the maintenance of a prudent financial policy to cover future uncertainties.