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Kasikornbank Targets 36% Growth in Trade Finance Business

Kasikornbank (KBank), a major Thai bank, has set an ambitious target of achieving a 36% growth rate in its international trade finance business this year. This comes despite the country’s decline in exports and imports due to global economic challenges.

Songpol Chevapanyaroj, KBank’s first senior vice-president, stated that the bank anticipates an increase in international trade business volume to 3.4 billion baht this year, accounting for 25% of the market. In 2008, KBank recorded a trade business volume of 2.5 billion baht.

To reach this goal, KBank has heavily invested in enhancing its service platform to improve efficiency and reduce processing time. The new system is expected to save customers four days in processing time. Songpol explained that this time-saving could result in an interest saving of around 313,000 baht per year at a 5.5% rate, based on an export or import volume of 520 million baht.

Although the faster service may reduce the bank’s interest income, Songpol believes that it will be compensated by an expanded client base and increased fee income. The system development is also expected to boost the business potential of the industry.

KBank predicts that the country’s exports and imports will decrease by 30% in terms of volume this year due to the global recession. The export-import volume of the bank’s clients is projected to fall by around 23%. The overall international trade business in the banking sector is anticipated to drop by 10% in terms of volume.

Despite these challenges, KBank remains committed to its growth target and will offer various products to its customers. One key contributor will be its hedging service. Demand for foreign-exchange hedging by small exporters and importers has risen to 40% of total export-import volume, up from 15% at the end of last year, due to the baht’s gains against the dollar.

KBank shares closed yesterday on the SET at 75 baht, down 25 satang, in trade worth 893.67 million baht.

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