Frequestly Asked Questions

Krungthai Card Public Company Limited (“the Company” or “KTC”) operates a credit card business as its main business, including credit card related business, merchant acquiring business, payment service, as well as a personal loan business which includes personal loan business under supervision and auto title loan. In response to changes in technology and society, the Company established the subsidiaries and added the occupational retail lending business, e-money business, hire purchase and leasing business, as well as holding business to support the Company's business operations to create sustainable long-term returns.

KTC operates in retail consumer finance business including unsecured loan which are credit card and personal loan business and secured loan which are prepaid service, auto title loan, leasing and hire purchase business. In 1Q2024, Total receivables are stated below.

The revenue structure of KTC consisted of interest income and fee income from two main businesses: credit card business and personal loan business, including leasing business. details shown in the chart below.

As of 1Q2024, the Group had total borrowings of Baht 59,344 million. The funding structure was divided into short-term borrowings (including short-term loans and the current portion of long-term borrowings due within 1 year) of 23.3% and long-term borrowings of 76.7%. KTC diversified sources of funding, including from Thai commercial banks, securities companies, insurance companies, and various funds, allocated as short-term borrowings from financial institutions and related parties at Baht 3,980 million, long-term loans from Krungthai Bank at Baht 10,500 million and debentures amounting to Baht 44,864 million.

The debt-to-equity ratio stood at 1.83 times in 1Q2024, dropping from 2.00 times in 1Q2023, and remained below the debt covenant of 10 times.

Furthermore, the Group has a total short-term credit line of Baht 28,871 million (including a credit line from Krungthai Bank of Baht 18,561 million). The Group utilized Baht 3,881 million of the short-term credit facility, leaving the remaining credit line of Baht 24,990 million.

The consumer finance industry experienced moderating growth, impacted by constrained debt repayment capability and the persistently elevated level of household debts. However, the overall Consumer Confidence Index in March 2024 stood at 54.1, marking the 16th consecutive month of sustained confidence, reflecting a generally positive sentiment. The industry's total credit card receivables as of February 2024 amounted to Baht 531,455 million, rising 11.6% (YoY). The industry's total credit card spending for the first two months of 2024 grew by 6.9% (YoY), while the receivables of personal loans (excluding auto title loan receivables) were Baht 504,771 million, up 0.7% (YoY). The auto title loan receivables stood at Baht 348,909 million, representing a growth of 34.8% from the same period in 2023

KTC's market share of credit card receivables for the first two months of 2024 stood at 13.2%, and the Group's market share of the total credit card spending was 12.4%, up from the same period in 2023. Moreover, KTC's market share of personal loans (excluding auto title loan receivables) was 6.3%.

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 to the debt collection process. As a result, the Company could perform well on debt collection and has good credit quality. In 1Q2024, bad debt recovery totaled Baht 1,041 million, rising 26.7% (YoY). This was divided into Baht 1,013 million for KTC and Baht 28 million for KTBL. The increase in bad debt recovery was due to effective debt collection across all business groups.

For 1Q2024, the total Non-Performing Loan (NPL) ratio of the Group was recorded at 2.0%. This represents a decrease from the 2.2% reported in 4Q2023 and a slight increase from 1Q2023, which had a ratio of 1.9%. The increase is primarily attributable to defaults on lease receivable. Specifically, the NPL ratios for credit cards, personal loans, and leasing for 1Q2024 stood at 1.2%, 2.1%, and 19.7%, respectively. The Group has set aside an allowance for expected credit losses of Baht 7,399 million, a decrease of 17.2% (YoY), resulting from accelerated write-offs for which provisions had already been established. NPL coverage ratio was at 353.8%, a drop from the same period in 2023, at 462.5%.

According to the separate financial statement, the %NPL for 1Q2024 stood at 1.5%, a decline from the 1.7% reported in the same period last year. The allowance for expected credit losses was valued at Baht 6,536 million, resulting in an NPL coverage ratio of 434.7%, down from 501.6% in 1Q2023.

Due to an accelerated written-off period, the credit cost for separate and consolidated financial statements in 1Q2024 increased to 6.3% and 6.4%, respectively. The Group has adequately provisioned for expected credit losses, ensuring sufficient coverage to mitigate potential economic disruptions and future uncertainties.

In 1Q2024, the expected credit losses amounted to Baht 1,683 million, up 23.2% (YoY), due to the accelerated write-off 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 since 2003 onward. The table below shows the dividend payment for the operating result during 2019 – 2023.

KTC's strategy has integrated sustainable economic, social, and environmental dimensions through Better Products and Services, Better Quality of Life, and Better Climate. KTC conducts its business with responsibility and continuously develops products, services, technology, digital innovation, and human resources to meet business demands, builds trust with stakeholders, increases access to financial products and services for Thai society, alleviates environmental impacts, and supports sustainable development goals of the United Nations. For more information, please visit the website at https://www.ktc.co.th/en/sustainability-development

➢ Target & Growth Direction

In 2024, the Group aims to expand its profits continually by targeting a 15% growth in credit card spending and a Baht 6,000 million new KTC P BERM Car for Cash loan booking. However, since the Group had adopted a faster bad-debt write-off policy, we had to revise our original 10% total loan growth target to about 6% - 7% growth. The KTC PROUD portfolio (0-90 days) targeted growth to 5%, and the NPL from 2.2% to no more than 2.0%.

In 1Q2024, most targets were short of projections due to the weaker-than-expected economy. Nonetheless, the Group believes that its strategy of building a higher-income credit card customer base, robust screening of credit card and personal loan portfolios and applications, and raising the awareness of the KTC P BERM Car for Cash among the target customer group should ultimately enable KTC to achieve its set goals.

➢ Sustainable Household Debt Solution Approach and Potential Impacts

The Bank of Thailand (BOT) published the regulations for Responsible Lending (RL) in the Notification of Bank of Thailand No. SorKorChor 7/2566 to reinforce the role of financial service providers in responsibly serving customers throughout the credit lifecycle. These criteria have been effective since January 1, 2024.

These lending management criteria encompass eight main areas: (1.) Product Development, (2.) Advertising, (3.) Sales Process, (4.) Consideration of customers’ debt repayment capability (affordability), (5.) Discipline Promotion and Financial Management during the indebtedness period, (6.) Assistance for Customers with Persistent Debt (PD), (7.) Assistance for customers with payment problems, including restructuring non-NPL debt for both preemptive debt restructuring (Preemptive DR) and troubled debt restructuring (TDR), and (8.) Compliance with Laws and Debt Transfers.

KTC has implemented measures to assist debtors in compliance with the BOT announcement as follows:

The adjustment of the minimum payment rate for credit cards from 5% to 8% took effect in the billing cycle starting from January 1, 2024. In 1Q2024, we found that most of the company's debtors could make the minimum payment at 8%. Only a minority experienced difficulties. Hence, the company proposed various fair and appropriate debt relief options for these debtors.

Moreover, the company has ready-to-implement measures to assist non-NPL debtors, which involves pre-emptive debt restructuring as soon as there is an indication that debtors may face payment difficulties at least once. This ensures that debtors can meet their obligations without falling into NPL status. The company will also propose at least one form of assistance for NPL debtors, especially before undertaking legal action, debt sale, contract termination, or asset seizure. In providing such debtor assistance, the company will consider the debtor's ability to repay without unduly increasing their debt burden beyond the original obligation.

KTC has reviewed the implementation of assistance measures based on the aforementioned criteria and is confident that these measures will not significantly impact the company's overall operations.

Furthermore, regarding the assistance of debtors with persistent debt issues (Persistent Debt: PD), which will be enforced starting from April 1, 2024, the company has assessed the potential impacts and estimates that if all qualified debtors participate in the program, our interest income will decrease by approximately Baht 18 million per month.