Robust growth targets amidst stronger scrutiny
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Robust growth targets amidst stronger scrutiny

Krungsri Consumer believes it can grow credit card and personal loan segments even as it follows new central bank rules

Mr Atis, left, and Mr Athip agree the company plans to follow central bank regulations meant to control debt.
Mr Atis, left, and Mr Athip agree the company plans to follow central bank regulations meant to control debt.

Krungsri Consumer, an unsecured loan unit under Bank of Ayudhya (Krungsri), is committed to prioritising responsible lending practices to control asset quality, even as it sets ambitious growth goals for 2024.

The company offers credit cards and personal loans, managed by General Card Services Co and Ayudhya Capital Services Co respectively.

Both segments displayed a positive trajectory during the first two months of the year.

In 2023, Krungsri Consumer posted substantial growth in both credit card issuance and personal loans. Credit card numbers surged by 339,000, marking robust 25% year-on-year growth.

Total card spending increased by 10%, reaching 365 billion baht.

For personal loans, the company achieved new loan growth of 92 billion baht, up 6% year-on-year. This pushed total outstanding loans to 148 billion baht, a 3% increase.

Atis Ruchirawat, managing director of General Card Services, said the ample card spending stems from three main sectors: insurance, petrol and online shopping.

Travel-related expenditures also grew significantly, with spending on travel agents rising by 83%, airlines by 54%, and accommodations and car rentals 30%, he said.

Strong growth targets

Krungsri Consumer set healthy targets for this year, aiming to issue 365,000 new credit cards, up 8% from 2023.

The company also targets an 8% expansion in total card spending to 393 billion baht and increasing new loans to a value of 100 billion baht this year, up 9% from 2023.

Krungsri Consumer plans to grow the outstanding personal loan portfolio to 151 billion baht, a 2% rise.

Mr Atis said the company believes it can achieve the growth targets after booking a positive performance in the first two months this year.

For January and February, it issued 62,000 new cards, up 10% from the end of 2023, while total card spending tallied 62 billion baht, also a 10% gain.

Krungsri Consumer increased new personal loans by 15 billion baht, up 8% year-on-year.

As of February, the company's total portfolio tallied 142 billion baht.

To drive business growth, he said the focus is on four key strategies: expanding core businesses, strengthening partnerships, fostering product innovation, and leveraging synergies within the Krungsri Group.

In addition to collaborating with Krungsri and its subsidiaries as part of the "One-Retail" strategy, there are plans for cooperation with the Japanese-based parent Mitsubishi UFJ Financial Group (MUFG).

Mr Atis said Krungsri Consumer is also looking into exploring innovative payment channels, such as smartwatches and other devices with payment features, alongside traditional card and mobile payment methods.

These features could attract a younger customer base, enhancing the loan portfolio over the long term, he said.

Overseas spending

The number of Krungsri customers travelling abroad last year totalled 183,000, a 132% gain from the previous year.

Overseas card spending by Krungsri customers amounted to 5.5 billion baht in 2023, a robust 97% surge from 2022.

The growth was largely fuelled by a return to normal following the pandemic, with Japan remaining a preferred destination among Krungsri Consumer clients, said Mr Atis.

As part of MUFG, Krungsri Consumer intends to leverage the "Think of Japan, Think of Krungsri" campaign, he said.

This initiative aims to enhance business collaboration with MUFG to expand business partnerships in both Japan and Thailand, said Mr Atis.

"Krungsri Consumer is joining with up to 20,000 businesses, 400 of which are Japanese partners, aiming to expand our Japanese partners to 600 this year," he said.

Responsible lending

Though it set ambitious growth targets, the company plans to prioritise responsible lending (RL) practices, in line with Bank of Thailand requirements.

Krungsri has long operated with this principle in mind, predating the central bank's new mandate, said Mr Atis, who also serves as chairman of the Credit Card Club for the Thai Bankers' Association (TBA).

He said some credit cardholders have been affected by the increased minimum payment ratio, rising from 5% to 8% of the total balance.

The central bank enforced the higher minimum payment ratio starting this year after easing the rate during the pandemic to alleviate the financial burden as the economy struggled.

The regulator said it intends to gradually phase out debt assistance programmes as the pandemic shifts into the background.

The minimum payment ratio is scheduled to rise from 8% to 10% next year, the standard rate prescribed by law.

The central bank said it anticipates this normalisation should align with the country's economic recovery trajectory, even as household debt escalates.

Household debt surged to 91% of the nation's GDP. The central bank said it wants to steadily reduce this debt ratio to less than 80% of GDP over the longer term.

"In January and February of this year, some credit cardholders were deemed delinquent after the minimum payment ratio increased from 5% to 8%," said Mr Atis.

"The Credit Card Club will wait until mid-year to assess the outcome of the higher minimum rate, conducting a thorough review of its impact on consumers. Following this evaluation, the association plans to discuss the matter with the Bank of Thailand."

Household debt efforts

Athip Sinpagekan, executive vice-president of consumer financial services and business leader at Ayudhya Capital Services, expressed confidence in containing non-performing loans (NPLs) for personal loans this year.

The company plans to manage NPLs using a RL approach and a robust risk management framework, he said.

Ayudhya Capital Services' NPL ratio for personal loans is around 2.5%, much lower than the industry average of 5%.

Mr Athip said the company is in the process of ensuring compliance with the central bank's persistent debt measure, scheduled to take effect on April 1 this year, part of an effort to address household debt challenges.

The regulator allows borrowers making payments on revolving personal loan products to voluntarily enrol in persistent debt schemes offered by financial institutions.

Under this initiative, participants are entitled to an annual interest rate cap of 15%, down from the current ceiling rate of 25% for personal loan products.

The scheme aims to help borrowers break free from the cycle of debt within five years, as outlined by the central bank.


Krungsri Consumer anticipates 7% of its personal loan clients will qualify for the persistent debt scheme.

However, the company expects only 10% of these eligible customers will opt to participate in the scheme, hesitant because they prefer to retain their existing credit line during an uncertain economic environment, he said.

"For some individuals, maintaining adequate liquidity is more important than securing a lower interest rate," said Mr Athip.

The majority of the company's personal loan clients use a First Choice product.

Clients with a minimum monthly income of 12,000 baht constitute the largest segment of its personal loan portfolio.

While the company sets a minimum income requirement of 8,000 baht per month for personal loan applicants, loan approval primarily hinges on the credit risk associated with each client, he said.

Mr Athip, who also serves as chairman of the Personal Loan Club under the TBA, insisted all 37 members of the club are gearing up to adhere to the central bank's regulations.

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