KTC expects lower earnings in coming year
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AFTER YEARS of handsome earnings, Krungthai Card anticipates a quiet 2016 as the company turns towards restructuring to prepare for bigger growth in the decades to come.
At a recent press conference in Budapest, Rathian Srimongkol, chief executive officer, cited the necessity of transforming people, processes and systems – highlighted as the most important factors for profitability.
He will take charge of human resource development next year to achieve the company's goal of becoming the No 1 player. The IT system would be overhauled with seamless integration of old and new systems.
“Our condition is good now but if we want to be a world-class company, this must be changed. Our goal next year is to grow our market share both in terms of card numbers and spending,” he said.
He declined to reveal the investment budget. Rather, he admitted higher expenses just as the Bank of Thailand’s rule on late payment charges goes into effect next year.
KTC and other credit card issuers will have to lower their charges from the maximum Bt250 per payment round to Bt100.
Since Rathian took the helm in 2012, the company has witnessed an impressive turnaround. From a Bt1.62 billion net loss in 2011, the company has posted net profits from 2012-14 of Bt255 million, Bt1.28 billion and Bt1.75 billion.
After showing earnings of Bt1.5 billion in the first nine months of this year, the company eyes Bt2 billion for the full year.
Its non-performing loan ratios still remain low – 1 per cent for personal loans and 1.4 per cent for credit cards as of September. Loan-loss reserves are at 395 per cent of NPLs.
The company grew credit-card spending through the upgrade of customer status and rewards programmes. Similar incentives will be maintained next year, while it plans to be more aggressive in drawing more young customers.
More products and services will be launched to boost personal loans, with closer operations with Krungthai Bank, its major shareholder.
Rathian was pleased that the businesses showed improvement, although the industry as a whole looked subdued due to the country’s high household debt.
This year, the company has welcomed 350,000 new credit-card customers and 135,000 new personal-loan customers. Loan applications have increased from last year but the approval rate declined in line with economic conditions.
The worst is over for the personal loan business, he said. In charting a future strategy, the company must be aligned with the fast-changing conditions in the economy and competitors’ moves.
“With profits, our aim now is to become the No1 player. But the discrepancy remains huge and a lot needs to be done,” he said.
He stressed the need for more improvement in people to ensure a smooth end-to-end process, which would in turn lift customer satisfaction and profits.
