KTC reports its 9M/2020 business operations under the new TFRS9 standard, announcing 4,011 million in profits, 3.5 million in total member accounts, and a decrease in NPL. The company is ready at full force to combat the economic crisis and other policies with major adjustments in business operations, including efficient work processing, operating cost reductions, and financial cost control. The company moves forward with the all-new “P BERM” business model along with studies on the payment system plan to strengthen the core business and generate long-term growth opportunity for the company.
Mr. Rathian Srimongkol, President & Chief Executive Officer, “KTC” or Krungthai Card Public Company Limited, states, “The economic situation in Q3 has shown signs of improvement due to easing measures. We began to see collaboration from entrepreneurs who are ready to revitalize the country in a variety of ways for Thailand to move forward, and create opportunities to support Thais to find employment and income, which caused a positive growth in terms of consumer confidence and public spending. Examining KTC in the last 9 months in retrospect, credit card spending had begun to improve accordingly; total the receivable portfolio expanded by 5.9 percent with good control of financial costs and a satisfactory level of bad debt.”
“Despite this, the company has been affected in regards to income generation due to limitations stemming from lower interest rate ceilings for the two main businesses. This includes a 2 percent drop for the credit card business and 3 percent for personal loans, as well as KTC's credit support for debtors affected by COVID-19 in accordance with The Ministry of Finance’s and The Bank of Thailand’s measures. There were debtor groups consisting of an approximate of 7,800 individuals who applied to join KTC's debt restructuring campaign which amounted in a total debt of 600 million Baht (information as of September 30, 2020). These factors prompted the company had also improved its entire work process to be more efficient in order to lower its operating cost, as well as writing off bad debts to truly reflect the reality of receivable portfolio.”
“As of September 30, 2020, under the new TFRS9 standard, KTC has a 9 month net profit of 4,011 million baht and 1,221 million baht for Q3. Total loan to customers and accrued interest receivables totalled 84,347 million baht (5.9 percent growth) and total member of 3.5 million accounts, comprising of 2,583,462 credit cards (5 percent increase), Total loans to credit card debtors and accrued interest receivables of 54,684 million baht (6.9 percent increase). The rate of credit card spending in the past 9 months is at -8.3 percent or a total of 139,993 million Baht, Overall NPL dropped to 1.9 percent and the NPL for credit cards totalled 1.4 percent. Personal loans accounts (including circle loans and self-employed loans) numbered 895,878 accounts (8 percent decrease due to account inactivity). Loans to personal loans customers and total accrued interest receivables amounted to 29,663 million baht (5.1 percent growth), and NPL for the personal loans business totalled 2.6 percent.”
“In the past 9 months, the company accumulated a net interest income (including credit usage fees) for Q3 and the first 9 months of 2020 at 3,498 million baht, a 2.1 percent increase compared to the same period last year, and 10,745 million baht, a 7.3 percent increase respectively. Meanwhile, income from fees (excluding credit usage fees) totalled 1,093 million baht, a -10.3% decrease, and 3,245 million baht, a -11.6% decrease respectively. At the same time, the cost to income was 31.7 percent, a drop 34.0 percent from the same period of last year owing to the fact that the company had focused more of its efforts on online marketing and reduced marketing activities for both new card acquisitions and card spending promotions.”
“KTC's total income for 9 months of 2020 amounted to 16,490 million baht, a slight -1 percent decrease compared to the same period last year. This is due to income gained from interest from credit card and personal loans receivables, which increased by 9 and 6 percent respectively. These rates are slower increases as a result of the effects of COVID-19 and The Bank of Thailand's reductions in the interest rate ceiling. Overall expenses totalled 11,476 million baht, from 5,223 million baht in operation fees, 5,095 million baht in expected credit loss (bad debt and doubtful accounts) and 1,159 million baht in financial costs respectively. Administrative expenses were reduced by 8 percent due to the decrease in commercial transactions and marketing activities. Expected credit loss (bad debt and doubtful accounts) totalled 5,095 million baht, an 11 percent increase compared to the same period last year, which can be broken down into 3,734 million baht of bad debt and 1,361 million baht of doubtful accounts.”
Mr. Rathian adds, “As a consequence of a global pandemic that spread rapidly and still have no sign of ending, coupled with continuously changing regulations of regulators, KTC had to make major adjustments in the form of creative disruption by considering creating a new business model to support the old core business. This was achieved by studying and testing the market of new financial products in a variety of new ways whether it be “Pico Finance,” provincial-level micro-loans for personal expenses,or “Nano Finance,” micro loans for occupation and loans with car license plates as collateral. Recently, KTC finally decided to launch a new loan in a different style under the “KTC P BERM” brand in the form of collateralized loans covering both car and motorcycle registration loans. This type of loan is considered low-risk and provides quick returns, consistent with the current economic situation. It is expected that loans under the “KTC P BERM” brand will become one of the new bases for KTC's business. Moreover, the Firm is in the process of studying information and project implementation methods on payment systems, and it is expected to become a new business that will play a role in complementing the core business and generate long term and consistent growth opportunity for the company.”