ICBC (Thai) increasing focus on retail banking

The Industrial and Commercial Bank of China (Thai) has set ambitious targets for retail banking to diversify risk from the small margins provided by corporate banking.

After getting into retail banking late last year, ICBC (Thai) plans to increase its loan portfolio in this segment to 40-50 per cent of total lending within three years, said Ye Hu, chairman of the bank. Retail loans at present account for 10-15 per cent.

He said the bank wanted to increase its role in transactional and retail banking because corporate lending was facing more competition and provided low margins. Retail banking could support the cross-selling of products and bring in fee-based income.

Most of the bank's retail loans are hire-purchases operated by its wholly owned company ICBC (Thai) Leasing. Hire-purchase, or lease to own, last year grew by 40 per cent.

The total loan portfolio at ICBC (Thai) is led by hire-purchase at Bt45 billion, followed by the Chinese Business Centre at Bt32 billion, corporate loans of Bt25 billion and branch banking of Bt15 billion.

The first phase of retail lending is credit cards and dual-currency (baht-yuan) debit cards. Its credit card was unofficially launched late last year, offered to VIP customers.

Chaiwat Tancheewawong, executive vice president for branch banking, said the bank would build brand awareness through the 13th Money Expo from May 9-12, where it will introduce retail products including credit cards and Internet banking to general customers.

Targeted customers are Chinese people in Thailand, Thais who frequently travel to China, and Thai consumers.

The next phase is to develop personal loans, a product the bank expects to launch next year.

Chaiwat said retail banking in Thailand was highly competitive, so ICBC (Thai) might take time to flourish in this segment. He added that the bank targeted customers who have activities in both Thailand and China to avoid the competition in the mass market.

Hu said the bank founded its Chinese Business Centre 18 months ago to capture bilateral investment and trade finance.

He said the bank did not think its performance would be affected by the aggressive pursuit of Chinese customers by Bangkok Bank and Kasikornbank because ICBC (Thai) would be approached by those two banks to join in syndicated loans, as the central bank's single lending limit is a barrier to lending to big corporates.

Apart from lending, ICBC (Thai) is focusing on transactions by corporates and individuals in both countries. Authorities in China's Guangdong province recently allowed individual customers to transfer yuan, which will bolster its fee income.

Last year, ICBC (Thai) enjoyed fee-income growth of 20-25 per cent to Bt367.55 million.

In the first quarter of this year, ICBC (Thai) saw loan growth of 10 per cent, and the bank projects total assets this year to grow to between Bt150-160 billion from Bt135 billion last year.

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Article source: http://www.thethailandlinks.com/2013/05/06/icbc-thai-increasing-focus-on-retail-banking/