Upgrading digital infrastructure at the core of Krungsri’s plans

The budget will be divided into three equal allocations of 15 billion baht covering operational costs, digitisation, expansion and green transformation, Krungsri president and CEO Kenichi Yamato said at a media briefing on Thursday.

He explained that the investment is part of the bank's new Medium-Term Business Plan (MTBP) for 2024-2026 and will serve as the foundation of the bank's path with the ultimate goal of becoming the leading sustainable and regional bank. 

“Our focus continues to be on adopting a customer-centric approach to deliver products and services through the enhancement of our digital and innovation capabilities,” he said, adding that to accomplish this, the 2024-2026 MTBP will prioritise three strategic goals: becoming a leading sustainable bank, driving regional leadership, and maintaining a leading position in its core business.

Noting the success of the previous MTBP, Yamato said that the bank will continue along the same path, but with greater caution, innovation, and professionalism, as well as meeting its clients' local contexts. 

“Krungsri has already established a sustainability leadership position by committing to increasing its social finance portfolio by 100 billion baht by 2030, as well as assisting clients in the issuance of sustainable finance. Our social and sustainable finance portfolio increased by 71 billion baht from the base year of 2021,” he said.

According to the new MTBP, the bank will broaden its sustainable finance offerings to reach a more diverse customer base, including small and medium enterprises (SMEs) and retail customers. It will also focus on helping corporate and SME clients transition to low-carbon businesses, as well as taxonomy, which classifies economic activities based on their carbon intensity using a traffic light system. 

“Throughout our journey, we have established a strong presence in ASEAN, significantly expanded our focus to the ESG space, and pioneered the introduction of Thailand's first sustainability-linked finance products, and established a robust corporate venture capital, Krungsri Finnovate, to actively support start-ups and technology companies," he said.

Meanwhile, to become ASEAN's most preferred regional bank, Yamato said Krungsri, through its strong partnership with Mitsubishi UFJ Financial Group (MUFG), one of the world's leading financial groups, has pledged to provide all possible solutions for Thai clients expanding into neighbouring countries while also assisting foreign investors in coming to Thailand.

Krungsri and MUFG's current ASEAN network covers nine of the ten ASEAN countries through Krungsri's overseas subsidiaries in Indonesia, the Philippines, Vietnam, Cambodia, and Lao PDR.

“Our regional presence strengthens the bank's capabilities in a variety of areas, including business models and product offerings, financing, risk management, digital solutions, and innovation. This establishes a solid foundation for Krungsri to become the leading regional bank. We will continue to use MUFG and Krungsri's network to drive growth by connecting with our clients' needs in Thailand and the region via the Krungsri Business Link Platform and Krungsri ASEAN Link service," he said.

Furthermore, recognising that digital technology and data are critical to making the bank stronger and more competitive, Krungsri will continue to invest in its “Jupiter Project”. 

The project is the bank's long-term digital transformation strategy to digitise its data, technology infrastructure, and innovative ecosystem, allowing Krungsri to improve its banking products and services while maintaining sustainable growth. 

The move will undoubtedly help the bank become a data-driven financial business, reinforcing its core strength and maintaining its leadership position in both the domestic and international markets. 

“We are investing in digital platforms and cutting-edge technology with a customer-centric strategy. These technologies, which include artificial intelligence and machine learning, are used to improve product and service offerings across all customer touchpoints, including branches, online platforms, mobile applications, and call centres," he explained.
 

The new MTBP was announced following the bank's strong growth in 2023, which included a 7.2% increase in net profit of more than 32.9 billion baht and low non-performing loans. 

“Our financial performance reflects Krungsri's accomplishments over the last decade. We have seen significant growth, with our net income increasing threefold over the last decade, from 11 billion baht to more than 30 billion baht. Currently, our return on equity leads the industry. We are also maintaining unwavering leadership in asset quality,” Krungsri's president and CEO said. 

With a goal of maintaining growth through 2024, Yamato said that the bank anticipates growing its loan business by 3-5% this year, with a targeted net interest margin (NIM) of 3.8–4.1%. It is anticipated that the cost-to-income ratio will be in the mid-40% range and the ratio of non-performing loans (NPLs) will be between 2.50 and 2.75%.

According to Krungsri Research, Thailand is on track for a gradual economic recovery, fuelled by increased public spending, policy support, a gradual rebound in tourism activity, and a notable increase in employment. However, as external headwinds threaten the prospect of sustained growth, tightened financial conditions and the threat of drought are likely to complicate matters and slow overall economic activity.