Krungthai Card Plc (KTC), a non-bank entity under Krungthai Bank (KTB), is edging away from car hire-purchase loans after the consumer regulator tightened the rules for this segment.
The company will not concentrate on auto hire-purchase loans because of the segment's narrower revenue margin after the Office of the Consumer Protection Board (OCPB) stipulated the ceiling interest rates for such loan products late last year. The rules are due to take effect on Jan 10.
As part of its rules for the contracts of car and motorcycle hire-purchases, the OCPB set a ceiling interest rate for new car loans of 10% per year, or an average fixed rate of around 5.5% per year, while for used car loans the ceiling is 15%, or 8.5% of the fixed rate, and motorcycle loans have a maximum of 23%, or 12.5% of the fixed rate.
The maximum interest rates would decrease KTC's interest income in the car hire-purchase segment, which also has high risks, said chief executive and president Rathian Srimongkol.
Mr Rathian said KTC would continue to manage its existing auto loan portfolio with a total amount of around 10 billion baht after the company bought the business licence of KTB Leasing in 2021.
However, KTC will not grow this loan portfolio, though it has no plans to sell the business licence, he said. The company will wait for a suitable time and opportunity before resuming the business expansion of this segment, said Mr Rathian.
"KTC has many types of consumer loan business licences. We'll grow our business in line with market opportunities to ensure they benefit the company overall," he said.
KTC expects to book net profit for 2022 of more than 7 billion baht, beating the projection of 6.5 billion. The company is expected to book 10 billion baht in net profit from 2027, Mr Rathian said.
Mr Rathian's term ends in 2023 and KTC plans to appoint a new chief executive next year.
KTC's three core businesses, comprising credit cards, personal loans and car title loans, will continue to drive the company's business and earnings growth for the next few years, he said.
For the credit card business, which is the top priority, KTC plans to acquire 180,000 new card members in 2023 in addition to the existing 2 million card members.
KTC targets total credit card spending of 260 billion baht, 10% growth for this year. The company plans to focus on customers in the upper-income segment earning 50,000-200,000 baht per month.
In addition, KTC aims to expand its personal loan portfolio by 7% this year, acquiring 110,000 new customers. The company expects to grow its car title loan portfolio to 9.1 billion baht by the end of 2023, up from a 1-billion loan growth target in 2022.
KTC expects to maintain its non-performing loan ratio at around 2% for 2023.