SET-listed Krungthai Card Plc (KTC) is in the process of acquiring a 75.05% stake in Krungthai Leasing Co Ltd (KTB Leasing) from Krungthai Bank (KTB), aiming to expand financial services to cover secured loan products.
KTC's board of directors on Wednesday approved the company purchasing 75.05 million shares of KTB Leasing at 7.92 baht per share, which is equivalent to a share purchase of 594 million baht, from KTB. KTB is a major shareholder of KTB Leasing with a 49.29% stake.
KTC, providing credit card and personal loan products, is scheduled to hold an annual shareholders' meeting to approve the acquisition deal in April.
KTB plans to submit the deal for approval with the Bank of Thailand.
Established in 2005, KTB Leasing mainly provides hire-purchase loans and financial leases.
The company scaled back its business operations during recent years and underwent internal organisational restructuring.
KTC chief executive Rathian Srimongkol said the auto loan business has high growth potential, leading the company to embark on the share purchase of KTB Leasing.
Equipped with hire-purchase loan and financial lease licences, KTB Leasing offers secured loan products under several collateral-based assets including property, several types of vehicles, IT and electrical goods, consumer goods and jewellery.
In addition, a lot of KTB Leasing's networks are located in key provinces nationwide, which will facilitate KTC's business expansion plan.
"We can expand into a new customer segment under the acquisition deal, and this will strengthen the financial services of KTB Group," said Mr Rathian.
KTC expanded into the car title loan business last year to explore new S-curve opportunities in the secured loan business. The digital platform is another key strategy to strengthen the company's business operations in terms of existing unsecured loan services and the secured loan business.
Under a strong risk management principle, the company still concentrates mainly on strengthening its asset quality rather than emphasising business expansion.
KTB president Payong Srivanich said the acquisition deal should help build up business synergy and strengthen financial services under KTB Group given the strong business capability of KTC.
With around 1,000 branches of KTB across the country, these will facilitate KTC's business expansion and increase its market share in the auto loan and hire-purchase loan businesses.
In 2020, KTC announced a net profit of 5.33 billion baht with a total loan portfolio of 90.1 billion baht. Non-performing loans were registered at 1.8% of total outstanding loans, while the company's total customer base tallied 3.4 million accounts.
As of December 2020, there were 2.57 million credit cards, accounting for total outstanding credit card loans of 60.2 billion baht, while distressed credit card loans stood at 1.3% of total outstanding credit card loans. KTC's personal loan accounts were recorded at 814,329, making up total outstanding personal loans of 29.9 billion baht, with a bad debt ratio of 2.7%.