Krungsri Consumer, the unsecured loan unit of Bank of Ayudhya (Krungsri), anticipates a rise in credit card loans during the second half of this year, despite a sluggish economy and an increase in the minimum payment requirement for credit cards.
The non-performing loan (NPL) ratio for credit cards managed by Krungsri Consumer is 1.4%, lower than the industry average of 2.9%.
However, the asset quality of credit card loans has declined because of economic conditions and regulatory changes, according to Atis Ruchirawat, head of Krungsri Consumer Group.
The Bank of Thailand raised the minimum payment requirement for credit cards to 8% of the total balance at the beginning of this year, up from 5% last year.
Credit cardholders were affected by this increase initially, but the impact has since stabilised, he said.
"We observed a rising trend in credit card NPLs starting from the second half of this year, and this is expected to continue until the end of the year," said Mr Atis.
"However, we anticipate the situation will remain manageable."
He said the company has been cautious in approving both credit cards and personal loans, trying to match clients' credit risk profiles with the economic environment.
The approval rates for credit cards and personal loans tally around 40% and 30%, respectively, representing a decrease of 1-2 percentage points from 2023.
Despite these challenges, Krungsri Consumer is optimistic about achieving its business targets for 2024, especially after a positive performance in the first half of the year.
In the first half, the company acquired 287,000 new customer accounts, with its full-year target totalling 617,000 accounts. This effort represents growth of 10% from a year before.
The increase in accounts contributed to credit card spending tallying 189 billion baht, nearing half of the full-year target of 393 billion, or 8% higher than a year before.
Krungsri Consumer expanded its new personal loan portfolio by 47 billion baht in the first half, up 6% year-on-year, as it targets 100 billion baht for the year, a 9% gain from the year before.
The total outstanding unsecured loan portfolio grew to 140 billion baht in the first half, up 2% year-on-year. The full-year target is 151 billion baht, 2% higher than in 2023.
According to Mr Atis, the company adjusted its business strategy to align with the economic environment over the next 12 months, focusing primarily on three core areas: credit cards, personal loans and instalment loans.
The company aims to maintain its leading position in these segments via sustainable long-term growth, he said.
In addition, Krungsri Consumer is positioning itself as a payment facilitator, developing innovative payments such as biometric systems, aligning with trends in the digital era, said Mr Atis.
The company is collaborating with hypermarket Lotus's to test facial recognition payments in a pilot project.