Credit card spending to nosedive

Credit card spending to nosedive

Credit card spending is forecast to pick up in November and December, in line with the government's private consumption stimulus.
Credit card spending is forecast to pick up in November and December, in line with the government's private consumption stimulus.

Credit card providers expect a double-digit contraction rate in credit card spending this year because of weak consumer purchasing power amid the pandemic.

Krungthai Card (KTC) forecasts spending by users of the bank's credit cards to shrink by 8-10% this year in relation to its existing 15% growth target. This would represent a total of 213 billion baht.

Although credit card spending improved in August after the government continued to relax its lockdown policy, from September to October it fell again, reflecting weak consumer purchasing power amid the economic downturn, said KTC executive vice-president Pittaya Vorapanyasakul.

The company expects credit card spending to pick up in November and December, in line with the government's private consumption stimulus through several fiscal measures, especially the tax rebate scheme, said Mrs Pittaya.

The tax rebate scheme will help encourage spending among the upper-income customer segment, who earn a minimum of 50,000 baht per month.

Given the deterioration in consumer purchasing power, KTC has shifted its focus to those people earning a minimum salary of 30,000 baht per month.

The company is also targeting credit card applicants with a minimum salary of 15,000 baht per month, in line with the Bank of Thailand's requirements, on a selective basis, she said.

"With a stronger level of risk management, particularly for credit card loan approvals for new customers, the approval rate has declined to around 34% of total applications from 44% earlier," Mrs Pittaya said.

KTC remains in the planning process for its 2021 business target. Initially the company expects to register positive growth in both the credit card customer base and card spending.

KTC predicts the total card base to reach 250,000 cards by this year-end.

Somwang Toraktrakul, managing director at Krungsriayudhya Card, a credit card unit under Bank of Ayudhya, said the company expects credit card spending to reach 190 billion baht this year, a 12% year-on-year decline, mainly because of the pandemic.

For the first 10 months of 2020, spending via Krungsri credit cards shrank by 12% year-on-year and the trend is likely to continue until year-end, said Mr Somwang. This rate is an improvement from the 50% contraction during the initial lockdown period (March to April).

Phonpimol Pathomsak, first senior vice-president at Kasikornbank (KBank), said the bank's credit card spending has continued to improve since July, following the government's easing of the strict lockdown policy.

The bank cut its target for credit card business this year to a 12% contraction, in line with current economic conditions, though credit card spending is anticipated to improve this quarter, said Ms Phonpimol.

"The government's tax rebate scheme will support credit card spending in the final quarter, which is expected to be the best quarter of 2020. We expect spending via KBank's credit cards to be at 100 billion baht this quarter," she said.

KBank projects the momentum of the economic recovery to continue into next year, helping to shore up credit card spending as a result.

Do you like the content of this article?

Police to charge protest leaders with lese majeste

Police have summoned seven leaders of anti-government protests to face charges of lese majeste over comments made at demonstrations that demanded reforms to the monarchy, a police source and a rights group said on Tuesday.


Local vaccine production

Local Covid-19 vaccine production should start in the middle of next year and a decision will be made next month on the first recipient groups, health authorities said on Tuesday.


Arkhom urges external loan sources

The Public Debt Management Office (PDMO) has been asked to consider seeking external loans to diversify lending sources amid higher demand from the private sector amid the Covid-19 crisis, says the Finance Ministry.