Islamic Bank on track to introduce credit cards

The Islamic Bank of Thailand (IBank) will enter the credit-card arena with an initial target of 100,000 cards.

Executive vice-president Rak Vorrakitpokatorn said the plan is part of the bank's five-year strategy to expand its business.

One major task is to increase fee-based income, which stands at 10% of total revenue.

"The 10% fee income is far lower than at other banks. Most of them have gained average fee-based revenue of as much as 35-50%," said Mr Rak.

IBank has set a target of achieving 30% fee revenue over the next five years.

After launching its credit card next year, IBank expects to achieve credit card loans of 2 billion baht.

Mr Rak said the segment will help the bank to gain annual revenue of 30 million baht from card fees and interest of 150 million baht from card loans.

He said the credit card will strictly comply with Islamic teachings. For example, holders cannot use it to buy prohibited goods and services such as alcohol.

KTC, the credit card subsidiary of state-owned Krung Thai Bank, is helping IBank develop a system and networks.

"We have planned to develop a special code to block cardholders from using cards to buy goods or services that are prohibited by Islamic teachings," said Mr Rak.

IBank is the only bank in the country that complies with Islamic teachings. It has outstanding loans of 125 billion baht.

The Muslim population in Thailand is estimated at 4-7 million out of a population of 70 million.

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Writer: Wichit Chantanusornsiri
Position: Business Reporter