KBank optimistic about credit-card business
ALTHOUGH Kasikornbank predicts that gross domestic product will continue to grow by no more than 4.4-4.5 per cent annually over the next three years, it believes it will be able to expand its credit-card business by developing payment innovations to suppo
He said key economic indicators had not shown clear improvement, so there was a high chance GDP would rise by 4.4-4.5 per cent and may drop to 4 per cent if the global economy remains sluggish. Chatchai said low growth might affect purchasing power, but KBank believes it can keep its credit-card business healthy.
KBank is the leader in the issuance of cards accepted by merchants, but there are still a lot of small businesses that don’t accept them. KBank developed K-PowerP@y, which allows merchants to use a smart phone as a card-accepting device, to cater to small and medium-sized enterprises. Of the more than 2.65 million SMEs in Thailand, only about 110,000 merchants accept credit cards.
“We are promoting K-PowerP@y with mobile point-of-sale [mPOS] to small businesses in the shopping and dining categories at Asiatique The Riverfront, JJ weekend market, Platinum Wholesale market and the Marketing Organisation for Farmers. K-PowerP@y will help drive the trade flows of small businesses and spending via credit cards and electronic data capture,” or EDC, he said.
KBank has about 110,000 card-accepting merchants nationwide, and expects to expand this by 30,000 with total card spending of Bt430 billion by the end of this year, an increase of 20 per cent from 2012. This would increase its market share of spending through EDC to 35 per cent from 33 per cent last year.
KBank has maintained its projection for spending via its credit cards of Bt263 billion, growth of 32 per cent year-on-year.
He said the ratio of household debt to GDP was a worry for the country but the outstanding debt in the credit-card business was Bt260 billion, compared with household debt of Bt897 billion.
KBank alone holds outstanding credit-card debt of Bt54 billion.
Chatchai said the trend of rising interest rates would resume next year, but this would not affect the credit-card business because their rate is fixed at 20 per cent per annum.
He said KBank expected the Bank of Thailand’s policy interest rate gradually to increase by 25-50 basis points next year and reach 4 per cent in 2016, meaning the debt service ratio of about 34 per cent may rise to 39 per cent.
