Thai banking giant wants to pour billions of dollars into Vietnam

With the goal of having 8.4 million users, Kasikornbank (KBank) - the second largest bank in Thailand - wants to invest more than 1 billion USD in Vietnam from now until 2027.

The information was just announced by KBank Chairman Pipit Aneaknithi. The majority of the money will be invested in banking operations, with 735 million USD. The remaining amount will be for two subsidiaries of KBank in Vietnam, the KVision investment fund (336 million USD) and the KBTG technology company (7 million USD).

Currently, KBank has a representative office in Hanoi and KBank Ho Chi Minh City branch is licensed to operate from 2021 with initial charter capital of 80 million USD. Just in May this year, they increased their charter capital to 285 million USD, becoming the foreign bank branch with the second highest charter capital in Vietnam.

KBank Chairman Pipit Aneaknithi (center) and KBank Vice Chairman Chat Luangarpa (left) share their investment ambitions in Vietnam. Photo: KB

Vietnam is considered a key growth area for the bank in Southeast Asia. It has a notable advantage in terms of a young population, many engineering graduates who can help the country participate deeply in the global supply chain, along with a government with good economic policies, according to Mr. Pipit Aneaknithi.

He likened the development formula for Vietnam to preparing a dish with three ingredients. The first ingredient is human resources, with more than 20 million engineering graduates each year. The second ingredient is technology. The third ingredient is finance, where the banking sector will play an important role in supporting industrial production activities to move forward.

By increasing its investment capital in Vietnam, the Thai banking giant is targeting small and medium-sized enterprises (SMEs) and individuals. Mr. Pipit Aneaknithi sees an opportunity as more than 97% of businesses in Vietnam are SMEs but only account for 20% of the market share in the credit capital market structure.

By the end of this year, the bank’s Ho Chi Minh City branch aims to disburse $40 million to SMEs and business households entirely online. A large seamless online service is being targeted.

For individual customers, KPlus has been on the market for a year and has 760,000 users. They aim to have 1.3 million users by the end of this year and 8.4 million users by 2027. Recently, this application launched a savings program with an interest rate of up to 8.5%/year for a 6-month term. A bank representative said that this interest rate was chosen to launch at a time when the average savings interest rate in Vietnam is decreasing.

In addition to the banking sector, KBTG Vietnam will continue to hunt for IT talent to increase its scale from 100 current employees to 650 people by 2027. Meanwhile, KVision is looking for promising projects to invest in.

Mr. Chat Luangarpa, Vice President of KBank, said that the bank’s ecosystem is based on a symbiotic relationship between entrepreneurship, technology and digital. In which, entrepreneurship inspires innovative ideas. As these projects develop, technology steps in to provide the necessary tools and solutions. Digital is the bridge, providing platforms and channels for innovations to reach a wide audience.

But the Vietnamese market - where there are many banks - is not an easy piece of cake .

The economic situation when they arrived in Vietnam was not very smooth. KBank received a license to open a branch in 2021, when the pandemic broke out. Until now, when Covid-19 has passed, the market has been more or less unfavorable, affecting banks in Vietnam.

In Vietnam, KBank only has a license for 1 branch, so the bank's leaders admit that they can only expand their customer network digitally, thanks to eKYC (electronic identification).

It is also possible that KBank will look for a suitable entity to acquire. Recently, Reuters reported that the bank is looking for an opportunity to buy Home Credit Vietnam for up to 1 billion USD. However, Mr. Chat Luangarpa declined to comment.

In the long term, while urban areas in Vietnam are growing rapidly, many rural areas still have limited access to essential financial services. KBank believes this gap creates room for expansion. And it must bet that future on the online channel.

KBank entered Vietnam with a three-legged stool: banking - technology - investment. This is the formula they have followed in their home country. This is the second largest bank in Thailand in terms of total assets, with 122.9 billion USD as of the end of 2022.

They are also quite responsive to new technologies such as issuing blockchain letters of guarantee, opening NFC exchanges or initial coin offerings (ICOs), and applying artificial intelligence (AI). Behind the technology infrastructure are 22,000 employees.

KBank, formerly a farmers' bank, was founded in 1945 by Choti Lamsam. The founder's grandson, Banthoon Lamsam, took over the management for 28 years before retiring as chairman in 2020. Currently, Banthoon Lamsam and his family have assets of 1.1 billion USD, making them the 32nd richest in Thailand according to Forbes .

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