KTC declares 2.913 billion in Q2 net profits and propounds the control of NPL for both credit card and personal loan businesses that is lower than the industry level.

Stocks and Financial Services Press Releases Thursday August 15, 2019 15:25
Bangkok--15 Aug--Krungthai Card

KTC announces Q2 2019 net profits that exceeded expectations with 16 percent year on year growth at 2.913 billion. Overall receivables grew 7 percent while credit card spending growth exceeded that of the industry. NPL for both credit card and personal loan businesses are constantly below the industry. The firm is moving forward by reinforcing trust and enhancing great customer experience, eliminating unnecessary work processes, and maintaining good debt quality in the second half of the year.

Mr. Rathian Srimongkol, President & Chief Executive Officer, "KTC" or Krungthai Card Public Company Limited, states, "Despite a positive and constant growth tendency in private consumption, the Thai economy grew slower than estimated, with pressure from high levels of household debt. The Bank of Thailand adjusted the GDP forecast for 2019 from originally 3.8 percent to 3.3 percent while the overall outlook of the personal loans industry in the first half of 2019 had experiences a slower growth compared to the same period of 2018."

"In the first half of the year, KTC's overall operations grew beyond expectation with consistent profit growth thanks to the increases in credit card spending and personal loans receivables. Owing to good control of portfolio quality and low bad debt, these factors led to the firm's consistent growth. Net profit grew 16% from the same period of prior year, an amount of 2.913 billion, while Q2 net profit was 1.323 billion. Due to increased provision for doubtful accounts, as well as other factors that contributed to increasingly difficult debt collection, recovery grew at a declining rate. Furthermore, the increasingly competitive environment in the personal loans business, changing consumer behavior, regulatory uncertainties, and influences form rapidly changing technology."

"As of June 30, 2019, KTC total asset valued at Bt. 78.356 billion, a 9 percent increase compared to the same period in the previous year. The main income generating asset is the net receivables which comprise 91 percent of total assets. Total portfolio was 77.121 billion, total member was 3.4 million accounts, or an 8.8 percent growth, comprised of 2,405,570 credit cards, a 6.9 percent expansion. Net credit card receivable was 49.658 billion. Market share of credit receivable was 12.5 percent. KTC credit card spending growth was 10.5 percent (industry growth was 8.2 percent) and market share of credit card spending was 11.3 percent. Non-performing loans declined down from 1.27 to 1.13 percent. NPL for credit cards dropped from 1.08 percent to 1.01 percent (the industry NPL was 1.85%). Personal loans numbered to 985,037 accounts, a 13.6 percent surge. Personal loans receivable was 27.177 billion, while market share of personal loans receivables was 5.1 percent, and NPL for the personal loans business was 0.81 percent, a slight increase from 0.77 percent (the industry NPL was 3.49) while coverage ratios remained at a high value of 622 percent compared to the same period last year which was 605 percent."

"Due to the fact that the portfolio grew 7 percent, KTC experienced an increase in income of 5 percent, totaling Bt. 5.528 billion, comprising of Bt. 3.323 billion in interest (including credit usage fees), Bt. 1.218 billion in fees, and Bt. 987 billion in other income (83 percent from bad debt receivables). Meanwhile, the firm controlled total expense (excluding income tax) at Bt. 3.871 billion, a 7 percent increase from marketing expenses which increased in parallel with the increased members, along with marketing operation costs. Simultaneously,

bad debt and doubtful accounts have also increased by 12 percent compared to the same period last year due to expansion of the portfolio, which requires increased provision. However, KTC continues to maintain its costs at satisfactory level as financial expenses decreased by 0.5 percent compared to the same period last year, resulting in a drop from 26.4 percent to 26.1 percent in operating cost to income ratio compared to the same period last year in Q2 2019."

"The firm has an available credit line of Bt. 25.790 billion, comprising of financial accounts of Bt. 16.420 billion from Krung Thai Bank, and Bt. 9.370 billion from other commercial banks. Financial costs for Q2/2019 was 2.91 percent, a decrease from 2.99 percent compared to the same period in 2018. In the first half of the year, financial cost was 2.87 percent, a decrease from the same period last year which was 2.97 percent, due to the issuance of new debentures with longer tenure and lower rates. At the same time, the firm's debt to equity ratio was 3.56, lower than the bond covenant of 10 times."

"We are expecting KTC to achieve even more successful results that exceed what was revealed in 2019 along with long-term growth from venturing into new businesses including Nano Finance, Pico Finance, and personal loans using car title loans. It is expected that a new business vision will come into fruition in the next 18-24 months. KTC will continue to maintain its efficient risk management procedures, develop new technologies to support its businesses, control risks of card frauds, and maintain high quality port of receivables throughout its operations."


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