BankThai to stay out of the card market
BankThai has said it will need a few years to boost its competitiveness before entering the highly competitive credit-card market.
Surachai Chitratsenee, the bank's senior executive vice president, said last week that BankThai was not ready to operate a credit-card business at present. He said that part of the reason for this was that the bank's consumer-loan business required a high level of investment, particularly for technology development. The bank will take a wait-and-see approach for the next few years. During this time it will consider whether to enter the credit-card industry, either on its own or with a partner. "Right now we believe the credit-card market is close to saturation point as cardholders tend to own around three cards each. So we must have a clear business strategy before we jump into the market," said Surachai. The bank's retail loans are expected to be worth Bt15 billion by the end of the year and are targeted to grow to Bt22 billion by the end of next year, most of which will be generated from personal loans and mortgages. Apichat Nantaterm, executive director of Aeon Thana Sinsap (Thailand), said there were around 18 credit-card providers in Thailand but he believed only seven or eight of them were capable of earning significant profits. These he divided into two groups. The first are large local banks and foreign banks that can capture the Bangkok market. The other group consists of non-bank companies based in the provinces. "Credit cards issued by some banks are only there to complete their universal-banking concept. I believe credit-card issuers other than these two profitable groups would generate quite narrow profit margins," said Apichat. The maximum annual interested rate that can be charged on credit cards is 18 per cent. Yet operating costs are quite high. If their customer base is not strong enough, it is hard for card-issuers to make significant profits, said Apichat. Aeon plans to launch a gold credit card next year for customers who earn over Bt50,000 a month. The company currently operates 1.45 million credit-card accounts, which it expects will grow to 1.6 million by the end of the year. The company's total customer base for its three loan products, credit-card loans, hire-purchase loans and instalment loans, numbers around three million, 51 per cent of whom live in the provinces.
Somruedi Banchongduang The Nation
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