Krungthai card gets time for turnaround

“KTC needs time to prove it can adjust. We should look at it from afar. But we are not confident that KTC can return to profit this year,” KTB president Apisak Tantivorawong said yesterday.
The news all week has been that the bank will tender for all of the remaining shares of KTC, but both sides deny the report. Apisak said that even though the bank had no plans to raise its stake, it hopes KTC can improve its return on equity (ROE).
KTC is going to cut costs, following its business plan, in order to take off again.
KTC’s cost-to-income ratio is higher than the credit-card industry’s 46-48 per cent. It aims to slash the ratio to below 40 per cent next year.
KTC’s business plan is acceptable, Apisak said, and the recent closing of 11 KTC branches is part of the cost-reduction programme. All of the group’s units should be running at the same 14-17 per cent ROE as the bank, or even better, he said. Subsidiaries should be making a profit and not be a burden on the parent company.
Even if KTC’s ROE is healthy, the bank has no plan to bring the credit-card lender into its portfolio, as KTC will lose flexibility if it becomes a state-owned enterprise.
The bank is focusing on its own debit-card business. It has launched the Miracle Thailand Card together with the Tourism Authority of Thailand and private partners to boost fee income and promote tourism. The quick recovery of flood-hit businesses is a good sign for the economy and loan growth this year, Apisak said.
KTB’s loans in the first two months of this year increased only slightly because of repayments by state agencies. Loans are set to surge this month thanks to private investment.
“We still focus on the private sector, especially SME [small and medium-sized enterprises] and retail loans, to boost yields, but the proportion of state loans might be increased, depending on the funding requirements of the government,” he said.
The ratio of private to state loans at KTB is 82:18.
To prepare for loan expansion in line with economic growth, KTB will seek shareholders’ approval next month to issue debentures worth Bt100 billion, which is enough to ensure that the bank has enough liquidity but is not much compared with the bank’s assets worth Bt2 trillion, Apisak said.