1. What are the company’s core businesses?
The core businesses of the company consist of credit card business (and its related products & services) and personal loan business. In the third quarter of 2019, each business’s total receivables are shown in the chart below
2. What are the company’s major sources of income?
There are two types of main incomes: interest income and fee income from both businesses. The remainder derives from other businesses’ revenues, including Circle loan and Self-employed loan, details shown in the chart below.
3. Total card spending of KTC versus Industry
KTC credit card spending in the third quarter of 2019 continues to grow. The growth is contributed by the customer behavior analysis, which helps promote card spending. The credit card spending growths are displayed in the chart below.
4. What is the sources of funding?
The company borrowings comes from various sources, including commercial banks, securities companies, insurance companies, asset managements, as well as public offering of debentures.
Both short-term and long-term borrowings are the main components of the company’s financing tools, which are substantially composed of bill of exchange, promissory note, debentures, and long-term loan. In the third quarter of 2019, cost of fund accounted for 2.9%; meanwhile, the proportions of each borrowing component are stated in the chart below.
5. Debt obligation of the company
The company’s debt covenant has limited to Debt to Equity ratio lower than 10 times. In the third quarter of 2019, the ratio is only at 3.28 times
6. Provisioning policy
The company provided the allowance for doubtful accounts for credit card, circle loan and personal loan receivables which have aging less than 90 days by using the loss rate net of recovery which the company believed that such loss rate reflects the current credit risk inherent in the portfolio. Moreover, the company adjusted the historical loss experience by the information on trend and economic conditions that might have an effect on the ability to repay the debt of the debtor groups including additional economic factors to cope with the potential risks from the future economic fluctuation and the company fully reserved for receivables which are defaulted for 90 days or more.
Although the company have not adopted TFRS9 accounting standard, the company already provided sufficient provision in accordance to the IFRS9
7. The tendency of portfolio quality
Asset quality continues to improve. NPLs of both credit card and personal loan has been constantly decreased since year 2013; as a result, the total portfolio’s NPL dropped. NPL in the third quarter of 2019 are as follows
8. What are the rational behind the success of KTC debt collection, and what are the company's expectations of the future collections trend.
The company is proactive in all steps of the process. With Screening that starts at card initiation, proven collection process, and management that monitor collection closely, the company is proactive in all steps of the collection process. Although bad debt recovery growth is increasing, as a consequence of the high amount of the recovered debt; growth in the future years may not be as that of the past.
9. What is 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 2016 to the shareholders at the rate of Baht 4 per 1 ordinary share or equivalent to 41.3% of net profit. The dividend payment in the year 2017, it was paid at Baht 5.30 per 1 ordinary share or equivalent to 41.4% of net profit. Later in the year 2018, the payment was made at Baht 0.82 per 1 ordinary share or equivalent to 41.1% of net profit.
10. KTC Shares after the Par Change
On July 6, 2018, the company held the extraordinary general meeting No. 1/2018 to approve the change in the company’s registered par value from 10 Baht to 1 Baht per share. And, effectively on July 13, 2018, the new registered par value had resulted in the company’s common shares increased from 257,833,407 shares, par value at 10 Baht per share, to 2,578,334,070 shares, par value at 1 Baht per share
11. 2019 Expectation
For 2019, KTC has aimed to achieve its credit card spending growth of no less than 15%, yet for the first nine months, it only expanded at 10%. The company has also targeted its receivables portfolio expansion at 10%, yet at the end of third quarter, the growth was at 9% (YoY). Meanwhile, the company’s NPL at the end of third quarter stood at 1.1%, same level as previously planned. The company anticipated that the credit card spending growth 15% will not be achieved. And despite the slowdown in the Thai economy, receivable growth should be around 10% resulting in net profit at similar level as targeted.
12. Current events
- Pico Finance and Nano Finance
KTC has established KTC Nano Co., Ltd. and KTC Pico (Bangkok) Co., Ltd. in which the company and Krung Thai Bank PCL. have jointly invested and hold shares in each subsidiary for 75.05% and 24.95% respectively. KTC Pico (Bangkok) Co., Ltd. has also increased its capital to own 100% shares of 4 companies, i.e. KTC Pico (Chonburi) Co., Ltd, KTC Pico (Pathum Thani) Co., Ltd., KTC Pico (Samut Prakan) Co., Ltd., and KTC Pico (Samut Sakhon) Co., Ltd
The new businesses are being developed to be a strong foundation for KTC in the future. Hence, these new business operations are being carefully planned and tested at a steady pace. Currently, it is too early to set targets for the new business. The testing is expected to consume a period of time and will be initially focused on small groups of customers so that the company could adjust its strategies in accordance with its long-term growth plan.
- Rules and Regulations
- Effect of the upcoming DSR measures from the bank of Thailand
The Bank of Thailand have not finalized its measures to control DSR, the bank only provided policy that guide financial institutions to implement responsible lending to control house hold debt problem.