The Thai economy in 2016 showed a gradual recovery with the government sector playing the role of a key driver. However, the challenges remain, especially in banking sector, such as high household debt, severe drought, slow growth in private investment, sluggish recovery amid global economic fluctuations, problems in foreign banking industry, and China’s economic slowdown. Moreover, we saw that the low interest rate environment has sparked critical condition on the Bank’s profitability. Private Investors found opportunities to raise funds through capital market amid low interest rate. Consequently, the bank’s loan outstanding was substantially declined by 6.1% from the previous year. Unfortunately, Gross NPL sharply rose by 19.3% and Bank’s non interest rate income slightly grew by only 3.3%. Nevertheless, the Bank’s net profit increased by 13.3% to THB 32,283 million, ranking us the third most profitable commercial bank, up from the fourth in 2015. The increase was due to 7.5% growth in net interest income resulting from intensive implementation of effective financial cost management. Consequently, net interest margin (NIM) increased to 3.30% from 3.02% in the previous year. The Bank continued to promote the strategic plan under the second phase (2016 – 2020) of the Three Summits Strategy, aiming at closing the gaps between KTB and our peers in terms of profit, market share and efficiency.
The Bank’s focuses remained generating sustainable growth and supporting the government’s endeavor to improve well-being of the people and enhance the country’s capacity through the National e-Payment by accepting PromptPay registration and providing G2C financial aid transfer service. Besides, the Bank was determined to offer new and innovative products and services, e.g. accepting payment for traffic ticket fines and penalties; accepting tax payment for The Revenue Department, Excise Department and Thai Customs; and electronic local bill discounting project (KTB e-LBD). We also placed importance on enhancing the effectiveness of IT management in order to effectively build data-driven strategies and define goals.
In 2017, we understand that there are many challenges especially the on-going development of the Bank’s foundations including IT system, effectiveness of work process and expertise of employees, in order to keep up with our peers and enhance our potential to compete in the industry and improve profitability in the long run. We also need to prepare for the future challenges that may affect our operation, including the transformation of national payment system in line with the government’s promotion of e-Payment and cashless society, which is expected to have significant impact on revenue and business model. The transition to digital bank amid technological advancement, the shift in consumer behavior and the emergence of financial technology (FinTech) companies will greatly intensify the competition. The Bank will then try to seize the opportunities arising from economic recovery, especially those due to the progress of the government’s investment in infrastructure and the growth in export.
As a large listed commercial bank and a state-owned bank, we need to ensure the importance of all stakeholder groups and sustainable profitability, as well as supporting the government in driving the economy. The Bank’s key operation plans in 2017 include the following:
- Supporting the National e-Payment project as the government has placed its trust on us to be one of the key drivers along with other financial partners, for instance, the extension of PromptPay for juristic person and participation in bidding for Electronic Data Capture (EDC) installation.
- Taking on new roles as a transmission channel and supporter of economic growth that follows government projects e.g. investment in infrastructure and Thailand 4.0 policy. We will be the key mechanism in directly and indirectly financing the target industries and will play important role in helping the government stimulating growth in regional economy all over the country and minimize economic inequality by employing area-based financing strategy and becoming the hub of near-border and cross-border trade as well as in the 18 provincial clusters according to the nation’s trade strategy.
- Aiming for the best digital bank by focusing on improving IT literacy, enhancing data analytics, rationalizing and reformatting network to optimize service channels.
- Developing employees and managing performance-based remuneration appropriately, making the Bank a performance driven organization. The Bank shall also adhere to “ONE KTB” practice – to integrate all of the Bank’s strengths into one – in order to become the market leader with integrity, transparency and trustworthiness; the one that understands customers best and creates innovations to satisfy customers’ needs.
Finally, on behalf of the Board of Directors, Executives, employees and subsidiaries, we would like to express our appreciation to all the shareholders, business partners in public and private sectors as well as customers and clients who have continuously placed their trust in us and supported us. We promise we will be “Your Trusted Banking Partner” and continue to operate our business professionally to increase financial stability. In doing so, we will take into consideration the benefits of all stakeholders, adhere to good corporate governance and support the government operations while driving the country’s economy so that all sectors are growing together firmly and sustainably.
Dr. Somchai Sujjapongse
Chairman of the Board of Directors
Mr. Payong Srivanich