BACKGROUND

Thailand Investment and Securities Company Limited (TISCO) was established as the first investment bank in Thailand in 1969. In 1974, it established the Thai Securities Co. Ltd to extend into the securities brokerage business. In 1983, the company was listed on the Stock Exchange of Thailand. In 2005, TISCO was the first finance company to upgrade its status to a commercial bank under the Bank of Thailand's Financial Master Plan. From a big player in the niche finance area, TISCO found itself become a small player in the banking industry, amidst giants such as Bangkok Bank, Siam Commercial Bank, Citibank, and HSBC.

Its consolidated net profits in 2011, 2012, and 2013 were 3,267 million baht (US$106.42 million), 3,705 million baht (US$120.68 million), and 4,249 million baht (US$138.40 million), respectively. The total assets in 2013 were 359,263 million baht (US$11,702.38 million) and loans and receivables in 2013 were 292,151 million baht (US$9,516.32). In 2013, TISCO Financial Group performed well, posting a return on average equity (ROAE) of 20.6 percent.

TISCO's mission is to be a financial institution with exemplary governance. It is dedicated to creating sustainable values for its customers, shareholders, people, and society. TISCO has six core values: customer priority, integrity and ethical conduct, reliability in service performance, mastery of knowledge, creativity in offering advice, and sound financial guidance for customers. The company has documented and communicated its corporate governance policy and code of conduct to all its stakeholders including employees, partners, and shareholders. In 2010, TISCO established a special division for Corporate Social Responsibility (CSR) dedicated to developing CSR projects.

Under its special division for Corporate Social Responsibility (CSR), TISCO has launched three new long term projects aimed at improving quality of life for the underprivileged in society. In 2013, TISCO Financial Group received the SET Award of Honor in the Top Corporate Governance Report Awards, organized by the Stock Exchange of Thailand and Money and Banking Magazine. The company has won various awards, including Board of the Year 2013 from the Thai Institute of Directors Association as well as Thailand's Ministry of Finance Ratsadakorn-pipat Award for excellent tax and regulation compliance.

TISCO Group has adopted the Balanced Scorecard technique in order to achieve balance in strategic planning performance dashboard sessions. from four perspectives: financial, customer, internal process, and learning. Key performance indicators are determined for all business areas, and linked to performance management to gauge employee performance. Business performance is constantly monitored through performance dashboard sessions.

BUSINESS OPERATION

TISCO is in two main businesses: commercial banking and securities. In the commercial banking business, TISCO offers financial services under its Commercial Banking Business license. Banking services are offered through its headquarters and 49 branches in every region of Thailand. In the securities business, TISCO provides securities services under its Securities and Asset Management licenses. These businesses are serviced through the headquarters and branches in Bangkok at the Esplanade Center, and four branches in upcountry in Chiang Mai, Nakorn Pathom, Nakorn Ratchasima, and Udon Thani.

In accordance with a client-centric approach, the service operations of TISCO are divided into four business lines: retail banking, corporate banking, wealth and asset management, and corporate affairs and corporate social responsibility.

The company works in retail banking, corporate banking, and wealth and asset management. For its overall loan portfolio, retail loans accounted for 60.3 percent, corporate loans 14.8 percent, and commercial loans 8.9 percent. Liability breakdown is 85.5 percent deposits, 5.1 percent interbank and money market items, 5.2 percent debentures, and 3.8 percent other. Given its limited banking platform, management sought to compete based on differentiation in value propositions rather than price, and on innovation rather than scale.

For retail banking, TISCO has a relatively narrow product range compared to competitors, and it has a fairly limited distribution network in the number of its ATMS and branches. On the asset side, retail loans reached 204.19 billion baht (US$6,651 million) by December 2013, with 92.2 percent of its portfolio in auto hire purchase With 22.2 loans, 7.0 percent in consumer loans, and 0.7 percent in mortgage loan. Auto loans were the core business area when the company was financially focused, and the bank strengthened this area by acquiring four car loan portfolios in 2019 to become Thailand's second largest car loan provider. New car hire purchases accounted for 80 percent of its portfolio while used car purchases accounted for 20 percent in 2013.

Corporate lending amounted to 53.68 billion baht (US$1,748.5 million) in 2013 with 24.9 percent year to year growth spurred by lending to public utilities and service businesses. Commercial lending totaled 32.03 billion baht (US$1,043.3 million) in 2013 with 24.3 percent year to year growth spurred by an increase in demand for car inventory financing.

Operating under TISCO Securities Co. Ltd, the company was in investment banking services for over 30 years and was the first to offer provident fund management in Thailand. In providing advisory services on equity and debt markets such as oil & gas, power, telecommunications, banking. TISCO Securities specialized transportation, health care, and manufacturing. TISCO also Deutsche Bank in equity research and percent market share in brokerage business. It has 3.1 brokerage to institutional customers.

TISCO was a leading player in wealth and asset management. In1 company to offer stock to institutional customers. In the capital market, TISCO was the first and was among a select ek reports number of financial institutions to receive the Asset Management License in 1992. In wealth management, the share and ranked third in the market), Private Fund company brokerage. Provident Fund management (13.7 percent market private banking and private sales In asset management, the company was in was management (10.3 percent market share and ranked fourth in the market) and Mutual Fund management (1 percent market share and ranked 13th in the market).

INDUSTRY AND COMPETITION

After the Asian Financial Crisis in 1997, the Thai authorities liberalized the banking industry and allowed foreign banks to own a majority stake in local banks for a 10 year duration. Structural changes in the financial sector included increased concentration, increased foreign participation, and increased importance of alternative funding sources. In 2012, there were 16 Thai local commercial banks and 15 branches of foreign banks.

After the 1997 crisis, banks and non-banks diversified their portfolios by shifting towards the retail segment. Foreign players had successfully captured high-value customers through products such as credit cards. In 2010, the Bank of Thailand loosened restrictions on foreign banks' distribution networks (from one branch maximum of 20 branches and 20 off-premises ATMs in 2012-3), allowing foreign banks to expand their branch network. The Thai government changed the deposit protection guarantee from the full amount to one million baht per account holder per commercial bank in August 2012, and consumers were expected to diversify their deposit accounts to different banks.

In 2005, banks began to offer more products as consumers became more sophisticated. They also expanded their branches more aggressively outside Bangkok and sought to increase efficiency and reduce costs through channels such as ATMS and Internet and mobile banking.

A study by HSBC revealed that consumer loans were still under-penetrated in Thailand, at 19 percent, compared to a regional average of 35 percent. In 2012, the Bank of Thailand eased its monetary stance by lowering the policy rates to cushion against potential deterioration in export-related sectors amidst the fragile global economy. In addition, the Thai government implemented a tax rebate scheme for first time car buyers, causing an increase in ownership of cars and a rise in demand for car loans.

As of December 31, 2012, the deposits of the Thai commercial bank industry were at 9,234,727 million baht (US$282,443 million), with a 28 percent growth year on year. As of December 31, 2012, loans from the Thai commercial bank industry amounted to 8,506,255 million baht (US$260,128 million), up by 13.7 percent year to year.

In 2012, the commercial banking industry showed continual growth, aided by the recovery of the domestic economy, improvement of consumption, investment for capacity expansion, and government's mega-project and stimulus measures. The competition in the deposit market remained intense along with growth in the credit market and fund raising for deposits in place of bills of exchange as a result of the revision of regulation related to the issuance of the bill of exchange and contribution rate of financial institutions to the Financial Institutions Development Fund (FIDF) and Deposit Protection Agency.

In the auto hire purchase business, the two major groups of competitors are (a) commercial banks and subsidiary leasing companies of commercial banks, and (b) subsidiary companies of car manufacturers and car dealers. In 2012, competition in the auto hire purchase market remained intense despite the record 75 percent growth of domestic new car sales due to pent-up car demand following the flood crisis during late 2011 and the government's excise tax rebate scheme for first time car buyers. Large financial institutions, which had funding cost advantages, offered low interest rates to attract customers. As the result, auto hire purchase loan providers shifted their focus from hire purchase loans for new cars through dealers to loans to clients against car registrations due to its better return.

In 2012, there were 40 companies that were granted license to operate brokerage business services and 741 companies that were granted licenses to operate financial advisory services by the Securities Exchange Commission. The competition was intense and there were mergers & acquisitions between brokerage companies in preparation for the securities business liberalization in 2012. Some revenue diversification strategies used by players were cross-border investment banking activities, exclusive partnerships with international brokers, and new services such as derivatives business and selling agent business. Several securities companies operated their own proprietary trading to increase trading income. Going forward, competitive pressure will increase significantly, in part due to commission fee liberalization in which a sliding scale commission fee will be applied to individual investors while freely negotiated commission fees will be applied to institutional clients.

There are around 29 players-including asset management companies, commercial banks, securities companies, and insurance companies in the asset management industry. As of December 31, 2012, the asset management industry recorded a net asset value of 3,464,558 million baht (US$ 105,957 million) with 21.6 percent year on year growth. The industry growth was driven by the domestic economic recovery and capital markets upturn. In the provident fund business sector, competition remained intense, driven by price cutting strategies. For the mutual fund business, there were high investment risks due to the Euro-zone debt crisis during the first half of 2013 and the slow recovery of the Chinese economy. As a result, the return of fixed income securities was becoming more attractive.

Questions

Examine the mission and core values of TISCO. Are they clear and appropriate? How could you improve them?

Use a SWOT analysis for TISCO. What are the key trends that need to be considered over the next three to five years?

Using market-product analysis, what growth strategies can TISCO pursue?

Select one target market segment for TISCO and develop the marketing program and marketing mix activities for this segment.

If you were to design a marketing dashboard for TISCO, what key indicators would you select? How would you collect data for the dashboard?.

iple Choice rife the choice that best completes the statement or answers the question. 1. Ms. Take borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of the following statements is correct? a. Ms. Take will repay the bank fewer dollars than she initially borrowed. b. Ms. Take's repayment will give the bank less purchasing power than it originally loaned her. C. Ms. Take's repayment will give the bank greater purchasing power than it originally loaned her. d. Ms. Take's repayment will give the bank the same purchasing power that it originally loaned her. 2. Which of the following is not among the four industries with the largest employment in the United States today? a. lumber b aircraft C. communications d. electrical components 3. Which of the following is not a function of prices in a market system? a. Prices have the crucial job of balancing supply and demand. b. Prices send signals to buyers and sellers to help them make rational economic decisions. Prices coordinate economic activity. d. Prices ensure an equal distribution of goods and services among consumers, Gina, a U.S. citizen, works only in Germany. The value of Gina's production is included in a. U.S. GDP and German GDP. b. U.S. GDP and German GNP. U.S. GNP and German GDP. d. U.S. GNP and German GNP. 5. The total sales of all firms in the economy for a year a. equals GDP for the year. b. is larger than GDP for the year. c. is smaller than GDP for the year. d. Any of the above is possible. . In the former Soviet Union, producers were paid for meeting output targets, not for selling products, Under those circumstances, what were the economic incentives for producers? a. to produce good quality products so that society would benefit from the resources used b. to conserve on costs, so as to maintain efficiency in the economy C. to produce enough to meet the output target, without regard for quality or cost d. to produce those products that society desires most After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are a. not included in GDP since they do not represent production. b. not included in GDP since the government collects taxes to pay for them