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SOMRUEDI BANCHONGDUANG
Sukdee: Default rates should fall this year |
Krungsriayudhya Card will write off 100 million baht in bad credit-card debts this year, according to managing director Sukdee Chongmankhong.
The loans, representing accounts past-due for more than six months, are relatively small considering the company's total credit card portfolio of 13 billion baht.
Mr Sukdee said default rates were expected to fall this year after the company cancelled many cards in 2007 as a precaution in line with tighter regulatory standards for the card industry.
In April 2007, the Bank of Thailand tightened lending standards and increased minimum repayment rates for cardholders to 10% of their outstanding balance from 5%, resulting in an increase in bad debt rates for the industry.
But Mr Sukdee said greater customer familiarity with the rules had helped improve financial discipline and debt servicing by clients, resulting in a decline in bad loan rates.
Krungsriayudhya Card, a 50:50 joint venture between Bank of Ayudhya and GE Capital (Thailand), has 800,000 cards outstanding and plans to issue 200,000 new cards this year.
Mr Sukdee said that for the year to July 31, the company had issued 130,000 new cards, with approval rates for applicants unchanged from last year at 50%. For the full year, the company expects its net card base to remain unchanged at around 800,000.
Card spending has risen for the company by 10% from last year to an average of 6,000 baht per card per month.
Higher spending was in line with higher product and service prices, particularly for food, consumer goods and fuel.
''Even though consumer sentiment is quite sluggish, the card business should improve this year from last year. Hopefully, the industry will be even better next year as the economic and political environment clears,'' Mr Sukdee said.
Krungsriayudhya Card yesterday launched an 80- million-baht points redemption programme allowing cardholders to redeem loyalty points for products and services at the point-of sale. The service is initially available with nine partners, including Caltex service stations, Tesco Lotus hypermarts, The Mall, The Emporium and Siam Paragon department stores, Central and Robinson department stores, HomePro and Pizza Hut restaurants.
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