KTC ADOPTS CAUTIOUS APPROACH

Krungthai Card (KTC) is rejecting more requests for credit card loans as repayment ability drops amid the pandemic.

Krungthai Card (KTC), a leading credit card provider, has been declining more requests for credit card loans because of waning ability of debt repayment of consumers amid the prolonged outbreak.

Presently, the company’s approval rate for new credit cards is around 36% of total loan applications, declining from above 40% previously.

Given higher credit risks, rising debt burden and lower ability of debt payment of consumers amid the Covid-19 impact, KTC has been tightening new credit card loan approvals, said Pittaya Vorapanyasakul, executive vicepresident for credit cards.

KTC mainly focuses on credit cardholders whose minimum income is 30,000 baht per month because of their higher purchasing power and the lower credit risks of this segment.

However, the company also welcomes credit card loan applicants with minimum income of 15,000 baht a month but it will mainly consider the applicants’ ability of debt payment when granting the loan.

“With the prolonged outbreak impact and the company’s tightening of new loan approval, we missed new card expansion target for the first half of this year and it would be lower than target for the full year,” she said.

In addition, security measures to contain the outbreak, especially social distancing, is another key factor impacting the company’s new customer acquisition.

For this year, the company aims to grow its new credit card base by 230,000 but it has acquired new card customers of 95,000 in the first half of this year.

This year the company targeted 8% growth in its customers’ spending via the credit cards of which it achieved only 4% growth in the first half. It is possible that it will achieve only 5% growth this year.

It forecasts that KTC card spending would pick up in the fourth quarter of the year, instead of in the third quarter as earlier projected.

The company would pay more attention to online shopping, in line with consumers’ changing behaviour.

Despite higher risks and economic uncertainties, KTC has controlled nonperforming credit card loans (NPLs) at a satisfactory level.

As of May, bad debt ratio for credit card loans was at 1.5%, rising from 1.4% in March, and it was lower than overall credit card industry at 2.3%.

Mrs Pittaya said there are around 14,000 KTC credit cardholders applying for the central bank’s debt relief measures, accounting for credit card loan outstanding of 1 billion baht.

Customers have also adjusted financial behaviour as a safeguard amid the pandemic, by spending in smaller-ticket size to lower than 7,000 baht per transaction compared with above 7,000 baht earlier.