Lenders are responding to the new Credit Card Business Act, which will shorten the interest calculation period and reduce their interest income, by promoting card spending to maintain revenue.
Issuing banks are competing for credit card use through various campaigns. Instalment payments at low or zero interest rates for a few months are a popular tactic. THANARAK KHOONTON
Kasikornbank forecasts the new law will shave 300-500 million baht in income off its revenue, said executive vice-president Chatchai Payuhanaveechai.
The bank has outstanding credit card loans of 50-60 billion baht, with half contributing to interest income, he said.
Under the new law, expected to take effect in July or August next year, card issuers can only start charging interest on the overdue amount after the due repayment date, while now they can charge immediately after a cardholder has bought products or services.
Typically, card lenders set the billing cycle at 45 days.
Kasikornbank, the country's fourth-largest lender by assets, has about 2 million credit cards in circulation.
Thailand's outstanding credit card loans total 260-270 billion baht, with 130 billion or 50% revolving balances.
Krungsri Consumer, the unsecured-loan unit of Bank of Ayudhya and No.1 in the market with 3 million credit cards, expects the new law to hit some of its interest income, but says it is too early to forecast the amount. However, it has been restructuring its infrastructure base to cope with the new law.
Thakorn Piyapan, managing director of Ayudhya Capital Services that oversees Krungsri Consumer, said revolving balances represent 65% of its outstanding credit card loans.
Promoting card spending will be a key strategy to maintain revenue in preparation for the change. Spending per card is 11,000 to 12,000 baht per month.
Krungsri yesterday joined hands with Thai Life Insurance and MasterCard to launch the Krungsri Quick Pay Service for smartphones and tablets yesterday. Thai Life will use the mobile service for its customers' premium payments through its agents across the country.
Krungthai Card (KTC) said it expects to share the same fate as its peers following the implementation of the new law as its revolving balances account for about 70% of its outstanding loans.
It ranks fifth in terms of card numbers at 1.6 million but aims to issue 400,000 new cards next year.
It will focus on upper-income customers who earn 40,000 to 200,000 baht per month to facilitate its 15% spending growth target next year, said executive vice-president Pittaya Vorapanyasakul.
KTC estimates 130 billion baht will be spent via its cards this year.
It aims to balance its lending portfolio by reducing its reliance on the mass customer segment, which accounts for 80% of its cards.