February 21, 2014 00:00 By Sucheera Pinijparakarn
Eyes top rank in credit-card business by 2018
Krungthai Card is spending big on marketing to catapult itself to the top of the credit-card business by 2018.
“In the past, we couldn’t grow like we wanted because we didn’t have [enough] money, but this year we have [money] and we must grow against the industry to gain market share,” Rathian Srimongkol, president and chief executive of KTC, said yesterday.
The aggressive move will become clearer this year after it succeeded in overhauling its overall operations in 2012 and achieving a net profit of Bt1 billion in 2013, one year earlier than expected. The company will work on its weaknesses in the credit-card business because even though profit increased, market share is behind the industry.
Rathian declined to reveal KTC’s ranking in the credit-card market but noted that it had a share of 8.4 per cent by cards issued, 12.2 per cent by receivables and 10.1 per cent by total spending.
KTC’s net profit last year surged 403 per cent to Bt1.28 billion, the best since the company was founded.
The company will allocate Bt1.5 billion to Bt2 billion to marketing campaigns this year. Campaigns will be offered to each customer segment. KTC aims to issue 400,000 credit cards this year, up from 130,000 to a total of 1.56 million last year.
“To drive growth amid the economic slowdown, we have to get more applications because we’re still keeping the approval rate at 40 per cent. Cardholder acquisition is not a problem but we have to improve the approval system especially accuracy besides the quick approval process,” Rathian said. Card spending is projected to increase 15-20 per cent after rising only 4 per cent to Bt120.93 billion last year.
However, card spending in the first two months is expected to be flat because customers lack confidence in the current situation.
However, the company has not revised its annual target as it still believes customers will get used to the situation and resume spending via credit cards.
The company will return to taking normal provisions this year after setting aside Bt5.09 billion last year to cover unexpected bad debt. The non-performing-loan ratio at KTC stood at 1.5 per cent, better than 3.7 per cent in the industry.
NPLs in upward trend
“The trend of NPLs in the industry is likely upwards, and KTC might see a rise as well as the market, but we do believe our provisions are enough to deal with the uncertainty this year,” he said.
For its personal-loan business, it has also set an aggressive growth target of 15 per cent in outstanding loans from Bt15.12 billion last year and 30 per cent in new cash cards from 100,000 last year, executive vice president Sudaporn Janwatanagool said.
Thanks to the strong channel of its parent Krungthai Bank, KTC gets quality customers from payroll account holders and state enterprises, so its NPLs are low.
However, Krungthai Bank plans to review its retail-loan growth target of 15 per cent this year after demand was softer than expected, said Weidt Nuchjalearn, a first senior executive vice president.
The bank will discuss the new target next week, he said.