Prakob Phiencharoen, the chieftain of Krungsri’s corporate and investment banking division, has been keeping a vigilant eye on the evolving demand for corporate loans. Despite reaching the loan growth targets set for the initial quarter, the bank is diligently monitoring the terrain as they steer through the remainder of the year. With a meticulous corporate loan growth target set between 5-7% for this year, the bank had impressively grown its loan portfolio by approximately 5% by the close of March.
However, uncertainty looms large. If clients continue to delay investment decisions due to the ambiguities surrounding US trade policy, it may impede the bank’s ability to broaden its corporate loans throughout the year. Prakob emphasised that the persisting uncertainty in tariff policies from leading global economies continues to challenge the prospects of corporate loan growth in 2025.
Nevertheless, the corporate sector remains instrumental in driving Krungsri’s overall loan growth, notably as expansion in other business spheres shows signs of deceleration. Not all is bleak, though. The demand for corporate loans remains buoyant, spurred by both inbound and outbound investments alongside sustainability-focused financing programs. Key sectors such as renewable energy, industrial estates, infrastructure, food and beverage, and healthcare, supported by domestic and international operators, are experiencing notable growth spurts.
Inbound investments primarily stream from regional powerhouses like Hong Kong, Taiwan, South Korea, Japan, and China. Krungsri has been actively engaging in several investment deals, encompassing project finance, mergers and acquisitions, and joint ventures.
Turning the spotlight to the automotive sector, Prakob elaborated on Krungsri’s strategic pivot towards the electric vehicle (EV) segment, which involves embracing the entire value chain from manufacturers and auto parts suppliers to car dealerships. The bank is also strategically adjusting its portfolio to achieve a balanced exposure between Japanese and Chinese EV brands amid ongoing industry transformations, as reported by Bangkok Post.
As of March, Krungsri, reigning as Thailand’s fifth-largest bank by total assets, is predominantly owned (76.8%) by Japan’s Mitsubishi UFJ Financial Group. Its corporate loan portfolio, a hefty 688.9 billion baht, is dissected into 193.2 billion baht from Japanese corporates and 495.6 billion baht from Thai and multinational firms.
“Amidst the heightened uncertainties in both global and local economies, we are honing in on specific sectors while keeping a close watch on those grappling with greater challenges,” Prakob articulately pointed out. The Krungsri chief also identified the real estate sector as an area riddled with challenges — from the slowdown in residential projects and an oversupply of office space to a sluggish hotel market, stunted by weaker tourism trends. Additionally, real estate operators are under the microscope due to bond rollover predicaments.
It seems like Krungsri is trying to hedge its bets with this focus on EVs and sustainable investments. Smart move or just trying to stay afloat amid the uncertainties?
Smart move! Renewable energy is the future, and they know it.
I agree, focusing on renewables is a sound strategy, but aren’t they putting all their eggs in one basket?
I think it’s just them being reactive rather than proactive. They should have seen these changes coming years ago.
With Prakob mentioning industries like F&B and healthcare, shouldn’t they also focus on tech? That’s where the big growth is.
You’d think so, but tech can be volatile. Maybe they’re just playing it safe with sectors they know well.
But isn’t finance all about balancing risk and reward? Tech might offer the reward they need.
The tech sector is overcrowded. Sometimes slower sectors present new opportunities. Healthcare, especially with an aging population, might be lucrative.
Focusing on Japanese and Chinese EV brands makes sense for them, but what about local brands? Are they getting any support?
Good point! Supporting local EV brands could strengthen their position more domestically.
The real estate sector’s challenges are concerning. Will the bank’s focus on EVs and renewables suffice to counterbalance that?
Oversupply and slow tourism are significant issues. Diversification can help, but it won’t solve everything.
So tariffs are the current boogeyman? I thought the global economy had more pressing issues.
Tariffs affect trade directly, so of course, they’re a big deal for a bank like Krungsri.
What’s next for Krungsri? Will they pivot more towards digital banking given these uncertainties?
Hopefully! In today’s age, digital banking can provide a competitive edge.
Can’t ignore tradition though. Many people still trust face-to-face interaction, especially in Thailand’s diverse economy.
Sustainability-focused financing programs sound great on paper, but are these just buzzwords or actual avenues of growth?
Phiencharoen has a monumental task ahead. Balancing growth across sectors while the real estate sector struggles isn’t easy.
Will Krungsri still be one of the top banks if they don’t fully adapt to these changes rapidly?
Adaptation is key, but Krungsri has giant backing with Mitsubishi UFJ; they’ll likely have the resources to navigate changes.
Interesting that inbound investments are from Asian countries predominantly; isn’t diversification needed there, too?
Well, regional investments might be more stable amidst global tensions, maybe that’s their strategy.
I’m all for renewable energy, but there’s a need for transparency in how these investments actually help reduce carbon emissions.
Are merger and acquisition deals really the best play right now with all the economic uncertainty?