Revealing the strategies of 6 state banks in 66, moving forward towards sustainability with Thanarat Ngamwalairat, BAAC manager.
Revealing the strategy of the State Bank in 66, moving forward towards sustainability and digital development in tandem with responding to government policy. Government Savings Bank moves forward to create Social Impact. GH Bank maintains its vision of being the best bank for owning a home. GH Bank aims to be a sustainable rural development bank. EXIM BANK is ready to drive trade and investment in Thailand. SME D Bank strives to be Bank for Thai SMEs, AOT, moves forward with organizational development in 4 areas.
BAAC reveals banking business direction
amidst the global economic recession
Mr. Thanarat Ngamwalairat, manager of the Bank for Agriculture and Agricultural Cooperatives (BAAC), revealed that The global economy in 2566 is likely to slow down significantly and be uncertain. This is due to inflationary pressures that are still high. The use of strict monetary policy by central banks from countries around the world, as well as the crisis in energy prices that continue to soar.
The Thai economy has been affected by the world's main economies that are also facing a recession. Especially the export and investment sectors are faced with slowing growth following the global economic situation. Economic growth will depend mainly on the recovery of tourism and consumption.
It is expected that the tourism sector will continue to recover after the COVID-19 situation is resolved, which will help support further economic growth. However, the Thai economy still faces challenges from high levels of household debt. and global economic growth is expected to be low throughout 2566. Looking at the outlook for banking business for 2566, it should recover cautiously. Consistent with the economic direction as follows
1. The credit business will grow within a limited framework.
1.1 The commercial banking business in 2566 may expand credit around 4.0-5.0% on average. For agricultural sector credit, expansion may be limited and within a cautious framework. It is expected that bank loans will grow approximately 2.0-3.0%, close to the growth in 2565, in line with the growth of the agricultural economy.
The challenge is related to the highly uncertain economic situation. high inflation rate Resulting in higher production costs. Net yields for farmers decreased. The household debt situation is still high. Including the quality of loans that are likely to deteriorate. It is a major obstacle to credit expansion.
1.2 The trend of non-performing loans (NPLs) remains at a high level. The amount of NPLs may not decrease quickly. But it is gradually improving, although in 2566 the government policy will not provide any additional special assistance measures for debtors in general. Debt management therefore depends on helping customers by restructuring their debts according to the guidelines of the Bank of Thailand (BoT), which is debt restructuring for debtors. By specifying conditions to help reduce the burden of debt repayment on debtors. That is more than just extending the repayment period.
1.3 Gradual increase in interest rates on loans and deposits according to market direction It will be an opportunity for financial institutions to grow net interest income. especially loan interest income Including finding and investing in available assets High yield (Yield) in order to have a higher net interest margin (NIM).
However, specialized financial institutions may have limitations. Including carefully raising interest rates on loans. This is because it provides financial services to customers who are quite fragile. This may affect your ability to repay debt. Therefore, it is necessary to consider carefully.
1.4 Provisioning burden etc. which is still at a high level It will affect the net profit estimate. This is because the lending business still faces risks from the economic slowdown in the future. Similarly, the agricultural sector faces accumulated risks in many forms, such as natural disasters and falling prices of agricultural products. which has not yet recovered and was aggravated by the COVID-19 situation. that affects the economy Including production costs that increase according to inflation.
2. Accelerating the search for new business
2.1 Banks in general Use financial technology to increase access to financial services, such as digital lending, where the amount of credit continues to expand. and development of digital assets (Digital Assets)
2.2 Driving finance for sustainability (Sustainability Finance), especially loan businesses that support the environment, society and governance. (Environment, Social and Governance : ESG) from sourcing funding sources for sustainability such as Sustainable Bond and Green Bond.
3. Accelerate competition in various dimensions of financial business. from changing regulatory criteria This is in line with the BoT's policy guidelines for the new landscape of the Thai financial sector, such as issuing Virtual Bank licenses, increasing the role of non-banks in FX transactions, and developing the central bank's digital currency. Including responsible lending policies, etc.
In the fiscal year 2566, BAAC has assessed the external and internal environment that affects BAAC's operations in order to review its strategic positioning to be consistent with the changing situation. Aiming to be a “high performance bank with excellent debt management” driving to solve the problem of deteriorating credit quality Improving work processes to become a high-performance organization Emphasis on driving in 3 important issues:
(1) Highly efficient debt management By integrating data under a standardized data infrastructure Ready to upgrade the loan process and supervision to ensure compliance with the rules
(2) Creating a Blueprint for Change so that BAAC's work systems and processes are linked to delivering value (Value) as desired by customers. under high efficiency operation
(3) Delivering work with a highly efficient human resource quality process through recruiting, evaluating, motivating, and supervising with good governance.
Revealing 5 strategies
To be a sustainable rural development bank
Mr. Thanarat revealed that in fiscal year 2566, BAAC has reviewed and maintained its vision of being a sustainable rural development bank. It is driven through 5 strategies as follows:
Strategy 1: Increase efficiency in data management To manage assets and develop comprehensive and modern financial services. Focus on upgrading the technology infrastructure to meet customer needs in a comprehensive and modern manner. By making use of data in asset management, developing technology systems to support future needs and changes in customer behavior. to create opportunities for growth Increase competitive efficiency and debt management
Strategy 2: Increase organizational and personnel capabilities to support missions and competition. Focus on raising the level of human resource management. By increasing the capabilities of personnel Increase work process efficiency to support organizational direction Including creating awareness of following the rules. along with developing research and innovation to create added value for the organization
Strategy 3: Manage assets and income in a balanced way. Focus on increasing efficiency in managing asset quality and capital adequacy. Increasing efficiency in revenue management Both interest and non-interest income Money cost management new business development or jointly invest in businesses related to the agricultural sector By connecting and expanding the agricultural and social sectors with related businesses together with the network. To create opportunities for business growth
Strategy 4: Restore, develop, and enhance the strength of the household economy. Focus on upgrading and restoring customer capabilities. Develop and raise the level of competitiveness according to the potential of customers. as well as supporting and connecting agricultural businesses with networks To solve the debt problem of farmer households and raise the competitive level of the household economy.
Strategy 5: Develop integrated community potential. To develop the grassroots economy sustainably under the BCG Model, focusing on creating an environment and mechanism that promotes the development of community potential towards high value agriculture by developing the community into a happy community under the BCG concept, taking into account social responsibility. and developing the potential of communities that are friendly to the environment
In addition, in 2566-2568, BAAC has also established a strategic concept framework, Triple High, which aims to achieve success (Milestone) each year. For fiscal year 2566, BAAC focuses on being high performance bank With excellent debt management (High performance with excellent asset management) with the following driving guidelines:
1. Upgrading the technology infrastructure to meet customer needs. Leveraging data to manage assets and create growth opportunities Upgrading data for asset management Integrate data to link customer behavior Upgrading the agricultural product database for management throughout the supply chain. as well as using digital technology to improve work processes for managing the quality of debt throughout the system
2. Upgrading work processes and human resource management to support missions and competition. By creating a system for developing career experts to support high potential employees. Upgrading the evaluation system and creating incentives, reviewing and upgrading work processes (Blueprint for Change), especially important processes. Develop work processes that support quality resource use. as well as develop research and innovation to increase the organization's capabilities.
“In the fiscal year 2566-2568, BAAC sets the strategic concept framework: Triple High, which aims for success each year: a high-performance bank. With excellent debt management in fiscal year 2566, a high-value bank by providing comprehensive agricultural financial services in fiscal year 2567, and a bank with high potential connecting the agricultural sector and society towards sustainability in fiscal year 2568.”
Follow and read the News Banking column: Revealing the strategies of 6 state banks in 66, moving forward towards sustainability. Available in the February 2566 Finance and Banking Journal, Issue 490 in digital format: https://goo.gl/U6OnIi
Including channels for ordering banking and finance journals Both current and past editions Complete in one place: https://moneyandbanking.co.th/2023/18250/
