KTC sees brighter year ahead for credit business
ALTHOUGH KRUNGTHAI Card (KTC) will miss the target of 400,000 new credit cards this year because economic uncertainty has dented consumer sentiment, it is maintaining its 400,000-card goal for next year as economic prospects are brighter due to the govern
The packages will be positive for the confidence of consumers, who have been less active during the slowdown, with the government’s stimulus measures leading to an expected rebound in spending, Pittaya Vorapanyasakul, KTC executive vice president for credit-card business, said yesterday.
This year’s economic slowdown has negatively affected the quality of customers, resulting in the company falling short of its full-year target of issuing 400,000 new cards, she said.
KTC issued more than 200,000 cards during the first nine months, and now expects the total for the year to come in at around 300,000, she added.
Pittaya said that based on the assumption of bright prospects for the Thai economy, KTC would not be altering its 400,000-card target and spending growth of 15 per cent for next year.
The mid- to upper segment will still be KTC’s key focus for new credit-card customers, even though it will still experience fierce competition, especially from small banks that have a customer base in the affluent segment, said the executive.
In the current economic circumstances, more applicants with a monthly income of Bt15,000 have been rejected on the grounds of quality than those in the upper segment, with a monthly income of Bt50,000, she explained.
The credit-card approval rate for KTC’s mass-market segment this year is around 40 per cent, lower than its overall approval rate of 47-48 per cent across all segments.
The company’s overall approval rate was 49 per cent last year.
“In the past few years, we might not have required some documents for credit-card applications, but this year we have asked for all documents in order to ensure their debt-service ratio and repayment ability,” said Pittaya.
KTC resumed its focus on the upper-income segment towards the end of last year by strengthening campaigns with partners.
As a result, the number of new credit cards issued year to date in this segment has increased by 25 per cent, from 20 per cent in the past, she said.
The company has a special team tasked with tracking inactive cards and the behaviour of spenders, and KTC can use this data to increase customers’ credit lines and offer attractive campaigns that match their lifestyles, in order to turn more of the cards into active cards.
Inactive cards currently account for 25 per cent of the credzit cards issued by the company.
