Bangkok--14 May--Krungthai Card
KTC declares first quarter performance with 3,102 Million Baht income and 2.2 million credit card and personal loans accounts. The firm is confident they will have profit again in the second quarter with proactive marketing programs planned for specific member groups.
KTC believes competition in the credit card and personal loans markets will intensify as a result of increase in labor wage and of economic stimulus subsidy from the government. The firm is confident its cost-saving and efficiency-improving plans will allow them to have profit again the second quarter. Proactive marketing programs are being launched for each segment of the members portfolio. That will be complemented by strategies where online marketing will be used, fees from synergy business will be sought and joint products will be offered in collaboration with Krungthai Bank for the utmost benefit of the customers, particularly in the personal loans business with the targets being public servants and state enterprise employees whose payroll account is with Krungthai Bank. During the first three months of 2012, KTC has gained an income of 3,102 Million Baht with 2.2 million member accounts, 41,418 Million Baht total receivables (net) and 155 Million Baht net loss as a result of the allocation of reserves for bad debt from the flood in the last quarter of 2011.
Mr. Rathian Srimongkol, President and Chief Executive Officer, “KTC” or Krungthai Card Public Company Limited, said “The overall Thai economy has picked up during the first three months of the year with higher private consumption index over the same period of the previous year. Consumers are consistently spending. The business sector is investing again following the resolution of the flood and improvement in the economy. There is also subsidy from the public sector injected into the system to encourage domestic investment and the expedition of the payout of the government for the purpose of rehabilitation from the said impacts. These are the key factors contributing to the clear economic recovery. As for the credit card and personal loans markets, it is expected that competition will intensify among all financial institutions in order to encourage more spending via the card and to attract more clients.”
“With regard to financial status as of March 31st, 2012, we have total assets of 45,743 Million Baht, down from 47,443 Million Baht as of December 31st, 2011. Net accounts receivable is at 41,418 Million Baht, down from 43,135 Million Baht of the same quarter of the prior year. Member base is now comprised of 2.2 million accounts with 1,610,849 being credit cards with net credit card receivables at 29,774 Million Baht and 585,845 KTC CASH accounts with net personal loans receivables at 11,332 Million Baht.”
“We still have the burden of reserves for bad debt from the impacts of the flood in the last quarter of the past year. In the first quarter of 2012, bad debt and doubtful accounts have decreased to only 1,298 Million Baht from 2,288 Million Baht of the fourth quarter of 2011. Financial expenses and management expenses have risen by 6% to 28 Million Baht and by 3% to 37 Million Baht respectively, compared the same period of the prior year. This is why we are having a net loss of 155 Million Baht for the first quarter.”
“Total income has risen by 1% to 3,102 Million Baht. Income from total interest income (including credit usage fee), fee income and income from other expenses for this quarter are 1,997 Million Baht, 817 Million Baht and 287 Million Baht or 64%, 26% and 10% of total income. Other income of about 83% is from bad debt recovery while total expense, exclusive of income tax, is at 3,235 Million Baht of a rise of 9% over the same period of the prior year due to the allocation of reserves for increased doubtful debt in the credit card business towards the end of 2011 and 36% lower than the last quarter of the past year as a rise in credit card’s provision especially for customers who suffer from the inundated during last year. Those receivable aging, indeed, reached 90 days within this first quarter of 2012. We have allocated 100% reserves for such debt but the amount involved is not significant.”
“Cost to income ratio in the first quarter of 2012 is 46% or the same as at the end of 2011 excluding the extra point reserve of 838 million baht. However, we remain active with the policy to lower expenses in the various areas of operation and to focus on the improvement of the work processes for greater efficiency. This will bring our operational expenses down to the industry level.”
“In the first quarter of the year 2012, we have available credit line of 28,115 Million Baht which is comprised of 18,030 Million Baht in credit line from Krungthai Bank and 10,085 Million Baht in credit line from other commercial banks. The debt to shareholder’s equity ratio is 8.7 which is lower than the obligated level of 10. Net interest margin has increased from 13.6% at the end of the year to 13.8% due to the increase of income from interest receivable in the personal loans business despite the fact that average cost of fund has increased slightly to 5.18% from 4.94% as at the end of 2011.”
“As for business policies and strategies for the credit card and personal loans markets, we will quickly establish advantages over our competition by introducing proactive marketing campaigns which should be found interesting by the different member groups. We will use online marketing quite heavily as it is easy to alter and the cost is also low. In the mean time, we will seek to secure fees from synergy business like traveling, insurance and website product sales. We will work with Krungthai Bank to offer joint products for the utmost benefit of the customers. We have also set a goal for continuous growth in the personal loans business with more emphasis on public servants and state enterprise employees whose payroll account is with Krungthai Bank. We will offer to them a variety of marketing campaigns via online channels while at the same time maintain the highest efficiency of our debtors portfolio.”
“Additionally, we have adopted the end-to-end operation system where each division of the company has thorough understanding of what they are doing beginning from the start of the work to the end with efficiency and flexibility. Our Call Center is also upgraded as Contact Center to cover all communication channels with the clients including online channels. We are training our staff quite intensively and encouraging them to develop a sense of shared ownership of the organization. With all these initiatives, it is expected that we will enjoy some profit beginning from the second quarter,” said Mr. Rathian in conclusion.