Salary hikes stir credit-card market
Commercial banks are expected to be the biggest players in the credit-card market amid increasing competition as the government-mandated wage increases lure state-owned banks into the market.
TMB Analytics, a research unit of TMB Bank, said commercial banks’ share of outstanding credit-card loans increased to 44 per cent in 2011, while non-bank issuers’ portion had dropped from more than 50 per cent in 2005 to 39 per cent. Foreign bank branches shared the rest.
“The industry shows high growth potential, particularly with the minimum pay for those holding bachelor’s degrees having risen to Bt15,000 [per month]. As they are now qualified to apply for credit cards, the market looks attractive, particularly for state-owned banks. Though they are on top now, commercial banks cannot stay idle, as they have many existing and future competitors,” it said.
Competition, initially focused on the volume of cards, is now focused on campaigns to boost spending.
According to TMB Analytics, the number of new cards has increased by an average of only 5 per cent per annum in the past few years, compared with more than 10 per cent in preceding years. In the past five years, commercial banks witnessed an 18-per-cent annualised increase in credit-card spending (excluding cash withdrawals), compared with 10 per cent for foreign banks and 8 per cent for non-bank issuers. This is despite a 3-per-cent annualised increase in goods prices.
On average, commercial banks’ credit-card clients spend Bt5,600 per card per month, up from Bt3,600 five years ago. Foreign banks’ per-card spending is Bt7,800, up from Bt6,000. Non-bank issuers’ record improved slightly from Bt3,100 to Bt3,200.
Overall, only 2 per cent of the outstanding loans are non-performing.
