1. Shareholding structure
2. What are the company’s core businesses?
KTC core businesses are credit card business along with credit card related businesses, merchant business, authorized payment dealer service business and personal loan business. In addition, the Company acquire Krungthai Leasing Company Limited (KTB Leasing) which operates Hire Purchase and Leasing businesses. As of June 2021, the Company has total receivables, credit card receivables, personal loan receivables, and lease receivables shown in the chart below.
3. What are the Company’s major sources of income?
5. The sources of funding and debt covenants of the Company
The Company borrowings comes from various sources, including commercial banks, securities companies, insurance companies, asset managements, as well as public offering of debentures. The types of financial instruments used in financing are short-term and long-term liabilities, i.e., bills of exchange, promissory notes, debentures, and long-term borrowings.
At the end of June 2021, the Company’s total credit lines amounted to 29,940 MB, comprising of 18,030 MB from Krung Thai Bank and 11,910 MB from other commercial banks. However, the Company has partially used such credit line with the amount of 7,610 (excluding the part of KTBL that has been used up to 1,100 million baht), resulted in the available credit line totaling 22,330 million baht as of the end of June 2021. The Company’s cost of funds stood at 2.62% and the debt-to-equity ratio is 2.45, which was very well below the bond covenant limited at 10 times. The proportions of each borrowing component are stated in the chart below.
7. Total card spending of KTC versus Industry
Due to the new outbreak of Covid-19 pandemic since April 2021, the consumer confidence was affected. Hence, the amount of spending declined. The situation pressured the recovery of credit card spending of the Company and the industry.
The overall card spending volume of the industry for the first half of 2021 equal 782,120 MB, increase 1.7% while the growth rate of the Company is at 3.9% resulted in the total amount of 94,160 MB.
8. Debt collection
The Company pays good attention on every step of the operation. We are very selective on approval process and performs very well on debt collection. In addition, our management always pays close attention in debt collection process. As a result, the Company could perform well on debt collection and have good credit quality. However, growth rates in the coming years may not be high due to (1) Currently high recovery base (2) Lower write-off (3) Better debt quality.
In the second quarter of 2021, the bad debt recovery amounted to 833 MB, increase 19.3% (YoY) consisting of an increase of KTC at 113 MB or 16.1% (YoY) and an increase of KTBL at 22 MB.
9. The tendency of portfolio quality and provision in the second quarter of 2021
The Company has relentlessly given its priority to maintain high quality of its receivable portfolio. NPL ratio for the Company in the second quarter was at 4.4%, increased compare to the first quarter at 1.9% resulting from the inclusion of lease receivable from KTBL as well as the spread of the Covid-19 pandemic. Meanwhile, the NPLs for credit card, personal loan, and leasing stood at 1.5%, 3.0%, and 51.7% respectively.
In addition, the Company had also been in full support of the government policy to assist debtors not to be too quickly classified as NPL during this abnormal economic situation by following the Bank of Thailand’s relaxation guidelines to postpone debt classification for NPL receivables who still can make predetermined repayment. As a result, the value of Stage 3 (NPL) receivables at the end of the second quarter of 2021 was 1,678 MB.
Regarding the classification for NPL receivables, the Company must set provision for NPL (principle and interest) according to the amount calculated from ECL Model (Expected Credit Loss Model) which will affect the ratio related to NPL and expected credit loss (allowance for doubtful account) as shown in the table below.
10. Expected credit loss
Expected credit loss valued 1,144 MB in total, down 45.1% (yoy), consisting of 1,321 MB of bad debts and -177 MB of doubtful accounts. Details are explained as follows.
At the end of the second quarter of 2021, the Company’s expected credit loss amounted to 9,739 MB, which the amount has embedded the Company’s Management Overlay of 1,000 MB to prepare to mitigate economic risk, as well as the risk of portfolio quality under uncertain circumstances in the future.
11. The calculation of KTC Allowance
Many factors affect the calculation of the allowance for doubtful accounts such as the change of the portfolio, portfolio quality, and the provision rate. Allowance is calculated by the following formula:
ECL = Expected Credit Loss “Allowance for Doubtful Accounts”
PD = Probability of Default
LGD = Loss Given Default (LGD = 1 – Recovery Rate)
EAD = Exposure at Default
12. Dividend payment policy
The shareholders’ meeting no. 1/2003 on March 25, 2003 approved the dividend payment policy to pay approximately 40 percent of net profit after deduction of income tax and appropriation for a legal reserve.
The Company made payment of dividends for the year 2018 to the shareholders at the rate of Baht 0.82 per 1 ordinary share or equivalent to 41.1% of net profit. Later in the year 2019, the Company paid interim dividends at the rate of Baht 0.88 per 1 ordinary share or equivalent to 41.1% of net profit. Then, in the year 2020, the Company paid annual dividends at the rate of Baht 0.88 per 1 ordinary share or equivalent to 42.5% of net profit.
13. Current events
I. BOT Forbearance Programs for Debtors Impact from the Covid-19 Outbreak
The COVID-19 situation since the beginning of 2020 until present inevitably caused the Bank of Thailand (“BOT”) to implement series of measures to assist the debtors who have been affected; which are summarized in the table below.
In addition, BOT has implemented measure to suspend the principle and interest payment for 2 months to assist individuals suffering a direct impact from the government's lockdown. The program targets employees and employers who have temporarily closed businesses as a result of the tighter lockdown. This measure starts with monthly payments for July 2021 onwards.
II. KTC Forbearance Programs
KTC is aware of the COVID-19 epidemic which affected the customers since 2020 until present. Hence, the Company release various programs consistent with the Bank of Thailand to assist members throughout the period. The amount of loan for the debtor participating in debt restructuring under the Company’s debt relief program as of June 2021 amounted to 1,545 MB (21,564 accounts).