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High spending alerts TBank to watch for credit card NPLs

After credit-card spending by its customers grew at a greater rate than the industry average in the first quarter, Thanachart Bank is keeping an eye on this trend to make sure it does not develop into a bad-debt situation.

First vice president Prinya Jinantuya said TBank's credit-card spending in the quarter grew by 10 per cent year on year, against 4-5 per cent in the industry as a whole. And that has triggered alarm bells at the bank, which in general is in line with the market in terms of spending growth.

"We are tracking whether our [unusual] growth was driven by our campaigns or other factors. This monitoring is part of our risk management to defend against bad debt," he said.

It will try to keep the rate of non-performing loans from credit cards at no more than 5 per cent. Currently the NPL rate is 3-4 per cent, while outstanding credit-card lending is Bt24 billion.

TBank's main credit-card customers are people with monthly incomes of Bt30,000-Bt50,000.

In addition to the standard features of its three core credit cards, the bank offers credit-line extensions and upgrades to inactive cardholders in an attempt to boost spending. These are defined as cardholders who have not used their plastic for 10 months.

TBank's three core credit cards are called Live, Drive and Max, each of which is designed to appeal to a different type of customer.

Prinya said the Live credit card was designed for customers who have a preferred repayment minimum, and the bank offers them a low interest rate of 15 per cent per annum, compared with the industry's 18 per cent.

Max cards feature a cash rebate of 0.8 per cent on every transaction, which is suitable for people who don't want to bother collecting reward points to redeem later.

Users of Drive cards enjoy a cash rebate of 3.5 per cent of what they spend at any petrol station nationwide. Most of TBank's credit-card customers use Drive.

About 70 per cent of the bank's cardholders are active users, which Prinya attributes to the cards' attractive features.

He said the bank would not launch new credit-card promotions this year but would improve the existing ones to maintain the customer base and spending rates. It will strongly promote Live credit cards because their repayment minimum leads to interest income.

The bank plans to issue 200,000 new credit cards this year.


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