KTC switching to month-end billings

Krungthai Card will soon start billing its credit-card customers at the end of each month instead of mid-month in an effort to reduce the rate of non-performing loans (NPLs), said KTC chief executive officer Rathian Srimongkol.

The change will take effect in March. After customers adjust to the new billing cycle, KTC expects a reduction by 0.3-0.4 per cent in its NPLs.

The move to month-end billings brings KTC in line with general practice of the credit-card industry. It expects its NPL rate by the end of the year to improve to 2.4-2.5 per cent, lower than the credit-card industry's level of 3 per cent.

Rathian said the company was aggressively pushing cardholders to spend more, so it needed to ensure debt-collection efficiency.

He said the billing-cycle adjustment would benefit the balance sheet, which meant its stakeholders would be happy with the return on equity. KTC this year targets double-digit ROE.

The company returned to profitability in the third quarter of last year after suffering net losses due to the flood disaster in 2011. This year's net profit is targeted to be double the 2012 figure, driven by customer spending and cost management.

Cost management last year was a key strategy to return KTC to profitability, but this year the growth of credit-card spending will be the main driver of the firm's income, said the CEO. Spending by KTC cardholders this year is expected to rise by 10 per cent, against 5 per cent last year.

The company has allocated Bt1 billion for marketing campaigns to encourage spending throughout the year.

In addition, KTC plans to launch a debenture worth Bt70 billion to support its business plan.