SET-listed Krungthai Card (KTC) plans to branch into nano- and picofinance next year to create new income streams.
The company proposed the business plan to expand into the two sectors to major shareholder Krungthai Bank (KTB) four months ago but has not received approval yet, said president and chief executive Rathian Srimongkol.
If the plan fails to win approval, the company will venture into the new business through a partnership, he said.
"We've already prepared infrastructure for the business expansion," Mr Rathian said. "We are ready to embark on the new business once we receive approval from both KTB and the central bank."
KTB is required to apply for nano- and picofinance licences for KTC in compliance with the Bank of Thailand's regulations, he said, noting that the targeted business is promising and opens opportunities for low-income earners to access formal financial sources.
Nano- and picofinance were initiated by the Prayut Chan-o-cha government as a means to help lower-income earners access formal financial sources and stay away from loan sharks.
The Finance Ministry's criteria require picofinance operators to have minimum registered capital of 5 million baht and confine their operations to a particular province. They are permitted to grant loans for general purposes and are limited to loans of 50,000 baht per borrower at a maximum annual rate of 36%.
Nanofinance operators can only make loans for occupational purposes, with a lending limit of 100,000 baht per borrower and a ceiling interest rate of 36%, but they can provide lending services across the country. Nanofinance operators must have minimum registered capital of 50 million baht.
Mr Rathian said the company, amid digital disruption, needs to search for opportunity in new businesses to generate new income and sustain profitability in the longer term.
As nano- and picofinance businesses carry higher risk, KTC will pay attention to asset quality.
KTC will keep a lid on the non-performing loan (NPL) ratio at 1.2% by the end of this year.
The unsecured loan service provider aims to maintain double-digit net profit growth next year, he said.
KTC predicts that net profit this year will reach 5 billion baht.
For the first nine months of the year, KTC's net profit amounted to 3.91 billion baht, rising 65% year-on-year.
KTC has 3.2 million customers, both in credit cards and personal loans.
KTC shares closed Friday on the Stock Exchange of Thailand at 32 baht, down 25 satang, in trade worth 221.2 million baht.
