ASEAN KEY DESTINATIONS
KTC posts Bt1.519 Billion net profit for the first half of 2017
Total number of accounts to surpass 3 million. Total portfolio NPLs
below the industry average. 10% growth of profit expected for 2017,
with active preparations for Bank of Thailand’s new regulations
KTC announced a 25 percent increase in net profit amounting to Bt1.519 billion for the first half of 2017. The company’s card spending figure also rose to 6.8 percent, which is above the industry average. The quality of accounts receivable has been improved, and net accounts receivable grew 10 percent. Gross NPL ratio was repeatedly reduced to 1.57 percent; lower than the industry average. A total number of credit card and personal loan accounts increased to 3 million.
“Overall, Thailand’s consumer finance market grew impressively in the first six months,” said Rathian Srimongkol, president and chief executive officer of “KTC” or Krungthai Card Public Company Limited. “The positive growth is in line with the global economic situation and the Thai economy that expand uninterrupted. In June this year, the Bank of Thailand adjusted its all-year economic forecast for the Thai economy in 2017 from 3.4 to 3.5 percent.”
He also said, “In the second quarter of this year, we continued to maintain our ability to generate revenue and make a profit. This was driven by improvements in the card spending figure and the upward growth of accounts receivable both in our credit card and personal loan businesses, as well as effective control of the NPL ratio to the level similar to the one from last year. Net profit for the first six months was Bt1.519 billion, up 25 percent, or Bt5.89 per share. In the second quarter of 2017, KTC reported a net profit of Bt787 million, a 7 percent increase from the last quarter or a 36 percent growth compared to the same period last year, which was Bt580 million. This can be contributed to a 12 percent rise in revenue, which was higher than total expense that surged 8 percent as a result of fees paid to outsource as well as the deduction of allowances for bad debt and doubtful accounts that rose in accordance with the growth of our portfolio.”
As of 30 June 2017, KTC had net accounts receivable of Bt61.645 billion, a 10 percent increase from the same period last year. It currently serves a total of 3.0 million accounts, an increase of 9.7 percent compared to the same period in 2016. These comprised of 2,180,786 credit card accounts generating net credit card receivables of Bt40.991 billion. Personal loan accounts reach 850,383 which generate net personal loan receivables of Bt20.503 billion. Total portfolio NPL was down to 1.57 percent from 1.91 percent compared to the same period last year. The NPL ratio for credit cards and personal loans were reduced to 1.22 and 0.88 percent respectively.
In Q2/2017, KTC’s revenue amounted to Bt4.820 billion thanks to a 10 percent increase in accounts receivable portfolio, which results in a 13 percent rise in the revenue from interest (inclusive of usage fees) and a 9 percent increase in other fees. Administrative expenses were at Bt1.751 billion, up 3 percent, which cover that of human resources management, fees paid and other operating expenses that slightly increased. Marketing expenses were noticeably reduced. Additionally, the company experienced a 13 percent increase in bad debts and doubtful accounts when compared to the same period last year. Despite the fact that financial expenses rose to 8 percent, a higher amount of borrowing reduced the cost of capital from 3.3 percent in the second quarter of 2016 down to 3.23 in the same period of this year.
Available credit line in Q2/2017 was Bt24.890 billion. This comprises Bt18.03 billion from Krungthai Bank and Bt6.86 billion from other commercial banks. Financial costs in the first six months were reduced from the same period last year to 3.20 percent. Debt to equity was 5.12, which was ten times below the bond covenant.
“Planning for the second half, KTC will adjust our strategy in response to new regulations of the Bank of Thailand. This is to boost the confidence of new target customers. We believe the new measure will encourage consumers to gain more financial discipline, which will result in an improvement of the industry’s overall accounts receivable portfolio and consequently lead to a positive effect on the accounts receivable portfolio of KTC. Additionally, this will help strengthen the relationship between card members and the brand of the credit card or personal loans they are holding,” said the CEO.
“Moreover, KTC will focus on maintaining a good relationship with existing card members although they won’t be affected by the new BOT regulations. We will continue to use proactive and unlimited marketing approach in order to enable card members in all areas to find the highest value of their KTC cards and make them happy every time they spend. No matter they pay by using a KTC card at any participating merchant in Bangkok, the provinces or overseas, or at a reliable online store, card members can be certain to enjoy our competitive, integrated marketing campaigns that cover all main spending categories. Most of all, KTC cards are designed and customized to meet specific lifestyles and highly adaptive to emerging trends, making them a primary card of choice that meets the needs of consumers while offering a satisfactory experience.”
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