KasikornBank, the market leader in credit card spending, plans to woo new customers in the provinces by offering attractive promotions, despite a failure to meet its target for credit card spending last year.
Credit card operators counted on a surge in cardholder spending over the New Year period, but the political turmoil put a damper on consumer activity, leading to a lower-than-predicted target for the bank, said Chatchai Payuhanaveechai, KBank’s executive vice-president.
KBank last year recorded customer credit card spending of Bt245 billion – Bt15 billion short of its initial Bt260-billion target.
“Luckily, the stock market plunged last month which encouraged customers to use their credit cards to purchase LTF/RMF. In December alone, KBank customers purchased Bt7 billion in funds using their KBank credit cards – compare this with the Bt10 bil?lion in purchases for the whole year,” he added.
Chatchai said that although the political turmoil had significantly affected consumer spending, the credit-card market was still expected to expand by 13 to 14 per cent this year, compared with last year’s 14.5 per cent.
However, KBank, which is aggressively expanding its customer-base in the provinces, has targeted growth of 30 per cent, or a target of Bt319 billion in customer credit card spending for the bank this year.
“New customers will help drive new spending, consequently, we will have to expand the number of new [credit] cards mainly in the provinces,” he said.
KBank is aiming for 670,000 new credit cards this year – a similar number to last year – amounting to a total of 3.6 million credit cards by the end of the year.
Chatchai said the bank also planned to launch major promotion campaigns with attractive conditions earlier than originally planned, in an attempt to stimulate consumer spending.
He said the bank would continue to develop its credit card business, despite a decline in consumer spending, as it generated a healthy income from fees and from the interest on outstanding loans. For every Bt100 of spending, cardholders must repay debt of around Bt75, enabling the bank to earn income on the interest gained from the outstanding debt, Chatchai said.
KBank’s income from interest payments on Bt64-billion in outstanding loans last year was Bt6 billion, while its income from customer credit card charges amounted to Bt4.5 billion.
Chatchai added that the bank’s interest on non-performing loans of credit cards was 1.43 per cent, lower than the market, which stood at 2.48 per cent. KBank’s NPLs could therefore climb by 10 basis points, in line with the economic slowdown.