Equity Analysis /

Krungthai Card PCL: Revenge spending (credit cards)

  • Ongoing strong credit card spending and personal loan expansion

  • New product—title loans (scope for fast growth with KTB’s help)

  • Strong earnings outlook, despite heavier marketing expenses

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
1 September 2022

We expect strong credit card spending (post-COVID “revenge spending”) and lending expansion in 2022, especially in 4Q22 (boosted by seasonality), even though we suspect that the title loan biz will miss KTC’s target. And we assume lighter LLPs (tighter loan approval standards and good debt collection). Hence, our 2022 earnings projection is Bt7.2bn, up 22% YoY. BUY!

Ongoing strong credit card spending and personal loan expansion

Credit card spending rose 16.6% YoY in 1H22. Our 2022 credit card spending assumption is 10% YoY to Bt215.3bn (in line with KTC’s target of 10% YoY; management said that all categories of credit card spending rose in 1H22, especially tourism and fine-dining). Moreover, we are confident that personal lending growth will achieve our assump-tion of 5.0% (below KTC’s target of 7.0%), as it rose 3.3% YoY in 2Q22. There would be scope for 5.5% upside to our 2022 profit forecast if the finco were to hit its personal loan growth target of 7% YoY and credit card spending of 15% YoY.