The credit card industry is likely to face its most significant challenge in two decades next year, driven by a relatively weak economy, according to the chairman of the Thai Bankers' Association's credit card club.
Atis Ruchirawat, chairman of the club, said the unsecured loan sector, which includes credit cards and personal loans, was affected by a sluggish economy in 2024.
Even greater obstacles await next year, with subdued economic performance expected in the country, including an uneven recovery hampering business expansion, he said.
The Bank of Thailand's debt assistance measures for credit cards, which include a reduction in interest rates by 0.5 percentage points in the first half of 2025 and by an additional 0.25 percentage points in the second half, are expected to limit the industry's income next year.
The central bank's decision to raise the minimum credit card payment from 5% to 8% has strained cardholders' ability to make repayments, contributing to an increase in non-performing loans (NPLs) within the segment.
"For both this year and next, the credit card industry is likely to experience the most significant challenges in two decades," Mr Atis said.
Mr Atis, who is also head of Krungsri Consumer Group, the leading player in Thailand's unsecured loan market, said Krungsri Consumer plans to emphasise controlling asset quality next year, which is expected to affect loan approval rates.
The current approval rate for credit cards is around 40%, while personal loan approval rates range from 20% to 30%, depending on the risk profile of the customer segment.
"Despite the sluggish economy, we remain optimistic about achieving positive growth in both the credit card and personal loan segments. On average, the growth rate is expected to exceed Thailand's GDP growth by two to three times, although the actual performance of each business segment will depend on economic conditions," he said.
Krungsri Consumer projects Thai GDP growth of 3% in 2025 and targets credit card spending growth of between 6% and 9%, along with expansion for personal loans.
The company expects to maintain steady NPL levels in 2025.
Krungsri Consumer's NPLs tallied 1.3% for credit cards and 2.5% for personal loans, both below the industry average.
The company expects to meet its business targets for this year despite slower economic growth. Krungsri Consumer predicted issuing 600,000 new credit cards in 2024, marking growth of 7% year-on-year, with card spending of 393 billion baht, up 8%.
For personal loans, the company plans to expand total new loans to 96 billion baht, a 5% increase, while growing outstanding personal loans to 150 billion baht, representing a 1% rise.
