JMT Network Services, which specialises in retail debt-collection and legal services, says increasing bad debts in the non-bank sector will help support its business growth.
CEO Piya Pong-acha said more bad debts bring about more opportunities to buy cheap non-performing assets.
Low-priced assets not only cover default risk but also push up profit.
Its net profit from debt collection is 20-25% of total revenue. JMT targets revenue of 390 million baht this year. Last year it made net profit of 67 million baht on revenue of 324 million baht.
JMT is a subsidiary of SET-listed Jay Mart Plc, the mobile handset distributor owned by the Sukumvithaya group.
Mr Piya said non-bank institutions are expanding aggressively, offering credit to people earning less than 10,000 baht a month to avoid direct competition with banks, which apply the 15,000-baht minimum monthly salary limit.
But with the lower limit comes higher default risk and non-bank institutions have become JMT's main source from which to acquire cheap assets.
Both bank and non-bank institutions are also willing to clear their bad-debt portfolios to avoid having to set aside more reserves, he said.
JMT currently has total outstanding bad-debt portfolio of 20 billion baht, projected to increase by 10 billion baht next year. The portfolio generated a margin of around 20-25%.
The bad-debt collection and management services for financial institutions generate a lower profit margin of around 15-20% since the company is bound to share the recovered sums with creditors.
Currently, 70% of income comes from non-performing asset while 15-20% is from debt collection management. The rest comes from used-car leasing.