KTC falls short on Q1 card issuance target

Weak recovery, debt dampen sentiment

Krungthai Card (KTC) got off to a slow start on new credit card issuance and card spending growth, falling short of its first quarter target, adding to signs that consumers are still cautious over their debt-servicing ability.

The company’s card spending for the three months to March expanded by 8% and the number of new cards issued was 70,000, compared with the targets of 15% spending growth and 400,000 new cards for the full year, said executive vice-president Pittaya Vorapanyasakul.

The fragile economic recovery and high household debt have eroded consumer confidence, particularly in the mass-market segment.

The bank’s mass-market segment is defined as those earning 15,000-40,000 baht a month, accounting for 75% of KTC’s 2 million cardholders.

The low spending season during the first quarter also caused KTC to fall short of the mark in the first quarter.

But Mrs Pittaya said that KTC’s spending growth for the first two months was better than the industry average of 3.5%.

Some market segments and spending categories showed positive growth in the first quarter, she said, noting that the provincial market grew 11%, supported by solid spending in some categories including shopping, dining, oil, tourism, and insurance.

Despite the lower-than-targeted growth in the first quarter, the bank is keeping its full-year goal unchanged.

Mrs Pittaya said the company managed

to keep a lid on its non-performing loans (NPLs) for its credit card business at a satisfactory level of 1.38% in the first quarter. The bank aims to hold its NPLs at that level throughout the year.

With an eye towards risk management to control asset quality, KTC’s approval rating for new card applications has fallen to 42% from 45% last year.

“We have not tightened criteria on new card approval, but applicants’ qualifications may not meet our requirements, especially their debt repayment ability,” she said.

KTC shares closed yesterday on the Stock Exchange of Thailand at 135.50 baht, up 2 baht, in trade worth 82.4 million baht.