KTC points to signs of high household debt

Pittaya Vorapanyasakul, executive vice president for KTC’s credit-card business, said the company had cut back on its promotions targeting low-to-middle-income customers as it did not want to encourage them to run up too much debt.
“The signs of high levels of household debt are that customers have increased withdrawals with cash cards, while borrowers have been paying the minimum balance instead of the full balance as before. As the company has also expanded the number of credit-card holders, outstanding loans in the first three months has increased slightly from the end of last year,” she said.
KTC is maintaining its target of aggressive growth in terms of new credit-card holders and spending, so the front and back offices must work closely to fend off bad debt. If the back office finds an increase in delinquency among certain groups, it will warn the front office to tone down its pursuit of new customers in the same group, she explained.
Fewer than half of applications for new credit cards are approved these days.
KTC aims to issue 440,000 new cards this year and targets spending growth of 15 per cent. Pittaya said that even though the company was behind target in the first quarter because of the slowdown in consumption, it believed that it could hit the target as it focuses more on first-jobbers in Bangkok and customers in 14 main provinces.
It will join forces with retailers upcountry in offering promotions to shoppers.
In the first three months, spending with KTC credit cards grew by 10-11 per cent. That was below the target of 15 per cent, but if compared with the same period last year, the performance was better thanks to spending in the travel category.
“We will allow increases in the credit lines of cardholders based on [their needs] and the risk of each customer. The debt-collection team has increased its [efforts] such as by sending SMS alerts. As a result, the delinquency rate in February was about the same as in January at 2.32 per cent,” she said.