Low credit card interest rate plead

The Credit Card Club under the Thai Bankers’ Association wants the Bank of Thailand to keep the present minimum payment rate for credit cards in place until next year.

Atis Ruchirawat, the club’s president, said that it was also doing to hold talks next month with the central bank to ask the minimum payment to stay at 8%.

Before, business operators informally took the matter up with the central bank, he said.

In a bid to ease the financial burden of borrowers amid a sluggish economy, the central bank had earlier lowered the minimum payment to 8%.

The regulator, however, is set to raise the rate again to the normal 10% level next year.

The credit card industry’s NPL rate was stabilised after adjusting the minimum rate, said Mr Atis.

With the economy fragile, a rise in the rate could hurt the ability of credit card customers to pay back their debts, he said.

The industry’s NPL rate was 2.6% at the end of last year, according to club data. There were 26 million credit cards in circulation as of 2024, a 0.9% year-on-year decline.

Spending on credit cards rose 4.6% over the period to 2.74 trillion baht.

“Our focus in the personal loan products this year will provide us with higher income since the credit card business has margins that are not wide enough,” said Mr Atis, who is also head of Krungsri Consumer, an unsecured loan unit in Krungsri (Bank of Ayudhya).

Krungsri Consumer says the lending cycle of both credit cards and personal loans are in the same credit cycle, therefore it is necessary to balance its portfolio between these two products.

In the last five years, the company cut down, its personal loan portfolio by approximately 10% considering high credit risk in that segment.

Strong risk management enabled Krungsri Consumer to outperform the market in terms of NPL rates, which were 1.1% for the credit card portfolio and 2.4% for personal loans, compared with the industry averages of 2.6% and 3.9%, respectively, he said.

For last year, that increased to a total of 6.2 million of the company’s credit cards, representing a new market share of 24% and a year-on-year increase in orders launched of 0.8%.

Krungsri credit card spending increased by 7.6% YoY.

At the end of last year, the company’s total loans outstanding were 146 billion baht, a 1.5 per cent year-on-year decline, versus 29 per cent industry-wide contraction.

Mr Atis said Krungsri Consumer aims to expand aggressively this year to boost revenue.

Selective growth would help sustain asset quality despite weakness in Thailand’s economy, he said.

For 2025, the firm is targeting 10% growth for both credit card accounts and card spending.

Krungsri Consumer forecasts new personal loans will grow 14% this year, with outstanding loans rising 8%.