Message from The Chairman
& The President
The Thai economy picked up in 2017 following the recovery of world economy which stimulated expansion in export and tourism sectors. However, the economic recovery was mainly limited to export-related industries and large corporate businesses while SMEs and the grassroots did not fully enjoy the benefits of the recovery. As a result, the growth of private investment was below expectations, posing challenges to the Bank’s attempt to expand credits and putting pressure on the asset quality, especially the SME loan portfolio. This contributed to the increase of NPL ratio which in turn affected the Bank’s profit. Nonetheless, we took this as our opportunity to revamp the internal process, especially the credit approval process, to enhance risk management discipline and efficiency, causing the quality of new loans to improve.
"The Bank, at the same time, boosted our strengths
by tightening partnership with the government sector and ensuring that our services were accessible to all customer segments"
especially those in regional areas and the grassroots which collectively made up the majority of the population. We are extremely proud to be one of the key players in driving forward the government’s major initiatives, in particular, the National e-Payment, Thailand 4.0 and Cashless Society schemes by putting in enormous effort to produce over 11 million state welfare cards and install EDC terminals even in Blue Flag shops in the most remote areas so that they can accept card payment. The Bank also launched “Paotung”, or payment acceptance application based on the QR code technology, for over 100,000 merchants and vendors nationwide while providing “Paotang” application for the public to facilitate their payment, cutting the hassle of disbursing and carrying cash as well as minimizing the risk of losing the wallet. Additionally, the Bank fully supported the cashless society initiative, starting with key communities in each province, e.g. the main market and university. The QR code-based e-Donation application was developed to allow donators to receive electronic receipt of donation almost instantaneously, while the e-Withholding Tax service was provided so that the Bank could act as an agent for customers in paying taxes and submitting tax documents to the Revenue Department. The Bank also contributed to supporting the government infrastructure projects not only by directly extending loans to the government, but also by granting loans to businesses within the supply chain of the government investment projects. Moreover, the Bank expressed full commitment to the government’s SMEs single account scheme and gave SMEs more accessibility to funding and lowered financing cost by providing products designed for specific purposes. The Bank’s strengths – strong partnership with the government and large customer base – will allow the Bank to build upon current business and be ready to seize the opportunity when the more broad-based economic recovery arrives.
The Bank put great emphasis on getting the organization ready to take on future challenges, both from regulatory and accounting standard changes and from the more intense competition among commercial banks plus with new players such as Fintechs and Telcos which have started to take on more important roles in providing financial services to the general public. Besides, the Bank set higher provisions for doubtful accounts in 2017 to increase its coverage ratio. In addition to enabling the Bank to better handle credit risk, such prudent provision practice will gradually prepare the Bank for the new accounting standards under IFRS9, which will become effective in 2019.
As the Bank is both a listed commercial bank and an organization within the government network, our mission is not only to generate appropriate returns to the shareholders but also to operate with responsibilities toward society and the environment. In this regard, three key principles have been upheld: integrity, fairness and responsibilities of treating all stakeholders equitably. In 2017, the Bank strengthened compliance with the Three Lines of Defense model to prevent or reduce operational risks. In addition, the Board of Directors, the Executives and all employees declared our intention to fight against all kinds of corruption and to adopt the zero-tolerance approach.We have also pushed forward the Krungthai Virtue Initiative to foster transparent and ethical operations within the banking context as the Bank aspires to become a model virtuous organization.
For 2018, the Bank will continue to focus on strengthening its foundation to meet the upcoming economic, technological and competitive challenges. The Bank seeks to become the best digital bank and the best place to work through the following plans:
Continuously strengthening the foundation.
The Bank has aimed to develop and invest in IT to reinforce its technological potential, streamline operations to become more digitized, and further develop data analytics capability to strengthen product and service innovations for a variety of customers. At the same time, efficiency in risk management and operating systems will be enhanced, along with continued preparation for the adoption of international standards, including IFRS9 and Basel III.
Enhancing operating results.
The Bank has focused on quality growth of loan, more fee income via the provision of “total solutions” to customers and stronger cross-selling capability, and proactive approach to business expansion in targeted areas such as the Eastern Economic Corridor (EEC) and border trade zones. The Bank will also expand its SME customer base and strengthen its SME customers by introducing the SME Community project, along with continuing to support government policies and government agencies in all dimensions.
Paving the way to future banking.
The Bank will continue to develop products, particularly products on digital platforms that deliver convenience, safety features and satisfaction to customers in every step of their daily lifestyle. The branch model and service channels such as mobile banking will be modernized, and a working atmosphere that is suitable for innovations and creative data usage will be promoted. The Bank will also continue to reskill employees so that they are most ready to embrace the new context of competition. In particular, our employees must be able to work effectively under new technologies and new styles of working, to have greater flexibility than in the past, and to fully comply with the Bank’s “F-A-S-T” core values.
On behalf of the Board of Directors, Executives, employees and subsidiaries of Krungthai Bank PCL, we would like to express our deep appreciation to all shareholders, business partners in both the public and private sectors and customers who have always placed trust in and lent support to us throughout the years. We promise that we will continue to operate our business professionally, striving for financial stability and financial prosperity. In doing so, we will take into consideration the benefits of all stakeholders, adhere to good corporate governance and support the government’s operations while driving the nation’s economy so that all sectors are growing together firmly and sustainably.
Dr. Somchai Sujjapongse
Chairman of the Board of Directors
Mr. Payong Srivanich