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Krungthai plans to raise Bt15.5 bn by 2018 from issue of debentures

Krungthai plans to raise Bt15.5 bn by 2018 from issue of debentures

SUNDAY, October 01, 2017

KRUNGTHAI CARD PLC (KTC) plans to issue debentures worth Bt15.5 billion for the rest of this year and into 2018 to replace expiring debt and to invest in developing an information system for a full-scale move to a cashless society.

The company’s chief financial officer, Chutidej Chayuti, said Bt3.5 billion will be raised from issue of debentures to replace the current one expiring over the rest of this year. The remaining Bt12 billion will be issued in 2018. The debentures would have 5-year and 10-year terms with returns of not over 3.3 per cent for the period. 
The country’s interest rate is expected to rise over the next year by up to 0.5 per cent.
“Although at this time the Bank of Thailand [BOT] has continued to maintain a policy rate of 1.5 per cent, the global trend is for interest rates to increase. We believe that the BOT will increase its policy rate by up to 0.5 per cent in the second half of next year. As a result, we have to issue the long-term debentures to maintain our financial costs,” he said.
Meanwhile, the company has continued to maintain business growth at 10 per cent this year. 
Although business growth was projected at 25 per cent in the first half of this year, most cardholders delayed spending this year, president and chief executive officer Rathian Srimongkol said recently while announcing its business plan for 2018.
In the first half of this year, the company reported total revenue of Bt8.06 billion and net profit of Bt1.51 billion. 
This compared with 2016 year-end revenue of Bt15.06 billion and a net profit of Bt2.49 billion. Rathian said the company also expected double-digit business growth in 2018, an increase over this year, by focusing on credit card and personal loans. 
To this end, the company has set aside an investment budget of Bt1 billion for 2018 to develop its information system, for which work has been ongoing since 2014. 
Some of that budget would go to developing new products to serve customer demand and prepare for the switch to a cashless society, reflecting the BOT’s policy and worldwide moves, said Rathian.
Krungthai Card Plc has a policy to collaborate with its partners to drive business growth through seeking synergies. For example, if its partners have fintech expertise, the company would collaborate with them to reduce financial costs and expand long-term business. A plan to launch its own wallet business this month has been a new-product focus of late as the company advances progress toward going “cashless”. 
In parallel, the company has applied to BOT for permission to bring out a QR-Code credit card, and is awaiting certification from Visa and begun talks with MasterCard.
“Visa will give us certification for our QR-Code credit card soon and we’re in the application process with MasterCard,” said Rathian. “This will be our next step to move to a cashless society.”
The company targets a double-digit increase in its cardholder customers and personal loan customers in 2018. This is apart from its efforts to drive double-digit business growth, Rathian said.