Bangkok--16 Sep--KBANK
To better serve the lucrative factoring business, KASIKORNBANKGROUP has made a major adjustment to its marketing strategies. To this end, KASIKORNBANK will operate the factoring business with the benefit of its broad customer base and vast international trade service network. This will enhance business opportunities for its international factoring. KGroup aims to retain its position as the market leader and to increase its market share in the factoring business to 30 percent by 2011. KASIKORN FACTORING, meanwhile, will focus on offering a complete machinery and equipment financing service.
Dr. Prasarn Trairatvorakul, President, KASIKORNBANK, recently said that KGroup has seen interesting developments in the factoring business. Over the past five years, the factoring business has enjoyed growth of 12 percent, on average, with market turnover now about 100 billion Baht. KFactoring is currently the market leader in the Thai factoring business. As of the end of 2008, the company had a market share of 21 percent. Bright prospects appear to lie ahead for the business due to rising demand for working capital among business operators, especially importers and exporters that offer term credit to their foreign trade partners. The factoring business offers a financing facility with the seller’s account receivable pledged as collateral in exchange for advanced funds for working capital. However, KFactoring has some restrictions in doing business, given that it has no FX license and an insufficient service network.
To take advantage of the increased business opportunities, the factoring business which is now operated by KFactoring — one of the KGroup companies — will be handled by KBank from 2010 onwards. With KBank’s vast international trade service network, totaling more than 60 International Trade Service Offices across the country, customers will receive more convenient service delivery, either in Baht- or foreign currency-denominated factoring transactions. The focus will be on KBank trade finance customers who have brighter business opportunities. KGroup will also be able to expand its factoring business in order to cash in on the promising international factoring market that, over the past five years, recorded average growth of as high as 27 percent per year.
KBank customers who apply for the factoring service will be entitled to more flexible pricing terms and conditions. For instance, if they also apply for other KBank services, they can share the assets pledged as collateral for both factoring and other credit services. Those in the financial supply chain of existing KBank customers will also benefit from special interest rates.
Dr. Prasarn Trairatvorakul added that the strategic change in KGroup’s factoring business is aimed mainly at offering the highest benefit to KGroup customers while also broadening the KGroup customer base. KGroup’s factoring business will thus potentially outperform peers in both the domestic and international markets. KGroup aims to increase its market share in the factoring business to 30 percent in 2011 from 21 percent in 2009, thus retaining its top position in the factoring business in Thailand.
KFactoring will meanwhile focus chiefly on machinery and equipment financing via its key services, i.e., hire purchase, financial lease and operating lease, in order to meet the needs of all customer segments, both machinery suppliers and those who need financing for the purchase of machinery and equipment. It is noteworthy that more than 600 billion Baht in sales of machinery and equipment were financed by various financing sources last year, whereas there were still few providers of machinery and equipment financing in the market. KFactoring aims to more than double its business next year in order to maintain its top position in the machinery and equipment leasing business over the next three years.