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 first quarter of 2019, each business’s total receivables are shown in the chart below. Additionally, KTC is in the process of forming up the Nano and Pico Finance Company, as well as requesting for business license from the Bank of Thailand and Ministry of Finance. Nano and Pico finance business are expected to launch in the third quarter of 2019.
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.
Rules and Regulations
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 first quarter of 2019, cost of fund accounted for 2.9%; meanwhile, the proportions of each borrowing component are stated in the chart below.
Debt obligation of the company?
The company’s debt covenant has limited to Debt to Equity ratio lower than 10 times. In the first quarter of 2019, the ratio is only at 3.25 times.
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.
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 are calculated by the following formula :
Where : ECL = Expected Credit Loss “Allowance for Doubtful Accounts”
PD = Probability of Default
LGD = Loss Given Default (LGD = 1 – Recovery Rate)
EAD = Exposure at Default “Ending Port Balance ”
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 first quarter of 2019 are as follows.
Total card spending of KTC versus Industry?
KTC credit card spending in the first 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
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.
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.
For 2019, KTC has aimed to achieve its credit card spending growth of 15%, yet for the first quarter, it only expanded at 10%. The company has also targeted its receivables portfolio expansion at 10%, yet for the first quarter, the growth was only at 7% (YoY). In addition, the company’s NPL at the end of first quarter stood at 1.2%, higher than the target of 1.1%. Nevertheless, the company is confident to manage its NPL to be as previously estimated. In term of profit, the company has anticipated to attain its profit growth of 10% for this year, and for the first quarter it already achieved the profit of 1,589 MB, a 31% growth.