Mr. Rathian Srimongkol, President & Chief Executive Officer, reveals, "The spread of the COVID-19 virus since early 2020 has drastically affected the world economy in unexpected ways. After the continual Thai economic recovery as a result of the government's economic stimulus from the end of Q2 onwards, the KTC credit card spending amount began to show a positive change, as well as the port of receivables which was able to expand. However, the new criteria of the Bank of Thailand to reduce the interest rate ceiling for credit card and personal loans has affected the Company's revenue in the final quarter of the year. In response to this, the Company adjusted its strategy to focus more on customer screening in order to maintain great care of the quality of assets. Other changes include creating new business models that are in line with changing consumer behaviour. In addition, the Company adjusted its organisational work processes to increase efficiency and to manage financial costs for maximum benefit, enforcing appropriate measures to manage debtor risks and write-off bad debts so that the receivable portfolio reflects reality, and bad debt receivables were at a satisfactory level."
"KTC continues to support the measures of the Ministry of Finance and the Bank of Thailand in providing credit assistance for debtors affected by COVID-19, including lowering the interest ceiling, increasing the credit line for credit card and personal loan debtors, providing an option to change to long-term loans, postponing payment of installments or principal payments, reducing annuities, and more, at full force. As of December 31, 2020, a group of debtors has applied for assistance in KTC debt restructuring with a balance of 813 million baht (10,812 accounts). Furthermore, on January 12, 2020, The Bank of Thailand announced the extension of measures to help retail debtors until June 30, 2021; KTC will continue to comply with such measures."
"In terms of the plan for 2021, amidst the ongoing volatility of the COVID-19 outbreak and the new wave in Thailand, the Company will adjust its business plan to strengthen its receivable portfolio for its 3 core businesses. This will be carried out by prioritising quality port of receivables and create loyalty to KTC through both online and offline marketing activities, and standing alongside all cardmembers by helping lighten their load. For the credit card business, KTC will work closely with business partners and focus on promoting more online marketing for all spending categories, which is suitable for the current situation. This will be done to cater to all needs of cardmembers. For the personal loan business, KTC will focus on reinforcing all functions of the "KTC Proud" cash card that boosts convenience for cardmembers with 4 distinct features: Withdraw-Swipe-Pay in Installments-Transfer, all-in-one card. For the "KTC P BERM" auto title loans, KTC will mainly focus on expanding the market this year. The Company set a growth target of 1,000 million Baht as a base to support future growth. For project plans related to "Payment System," currently we are in the process of research on information and implementation. The Company believes that this will soon become a new business that will complement the core business and create opportunities for growth with sustainability and stability in the long run."
"KTC's turnover in accordance with the new TFRS 9 standard as of December 31, 2020, are as follows: KTC has a net profit of 5,332 million Baht (5,524 million Baht in 2019), total loans totalled 90,149 million Baht (4.3 percent growth), and NPL to total loans is at 1.8 percent. Member base numbered 3.4 million (similar to 2019), comprising of 2,575,684 credit cards (2.6 percent increase), with a credit card account receivable of 60,235 million Baht, and credit card spendings experienced a drop of -7.7 percent or a total of 197,087 million Baht. NPL for credit card receivables is at 1.3 percent. Personal loans (including Circle Loans and Self-employed Loans) numbered 814,329 accounts (-8.3 percent decrease) due to account inactivity. Total personal loans receivables amounted to 29,915 million Baht and NPL to personal loan receivables totalled 2.7 percent."
"In 2020, the Company had a total revenue of 22,056 million Baht, down -2.5 percent from the same period of the previous year, as a result of an increase of 5.7 and 2.8 percent for credit card interest and personal loan receivables, respectively. These growth rates are considered a slowdown as a result of the impact of COVID-19 and the reduction of the Bank of Thailand's interest rate ceiling. Meanwhile, receivables from fees (excluding credit usage fee) is at -11.0 percent due to a drop in income from interchange fees, cash withdrawal fees, and acquiring business fees. Simultaneously, overall expenses totalled 15,400 million Baht, composed of 7,260 million Baht in operation fees, which decreased by -6.0 percent from a reduction in trade and marketing activities. Expected credit loss totalled 6,605 million Baht (bad debt 4,920 million Baht and doubtful debt 1,685 million Baht), an increase of 2.7 percent, and financing costs of 1,534 million Baht, respectively. The operating cost to income ratio is 25.4 percent, a slight increase from 25.3 percent, and the cost to income ratio is 32.9 percent, a decrease of 34.1 percent, due to a reduction in marketing activities for acquiring new cardmembers and a switch for more emphasis on marketing for online credit card transactions."
Source: Krungthai Card