KTC Seeks a Way Out from a Dead End, Paving the Way to Leasing Business

KTC Seeks a Way Out from a Dead End, Paving the Way to Leasing Business.

Krungthai Card Public Company Limited (KTC) had been praised as a growth stock in the past few years due to a constant increase of 40-50% in revenue and profit each year from its three core businesses; 1) credit loan, 2) personal loan and 3) car-title loan.


However, KTC’s growth rate started to shrink in recent years noticeably in its credit-loan business that showed small growth in the credit loan business, which could be due to a steady member base, while acquiring fewer new members.


As for personal loans, the business has high competitors, while being pressured by the Bank of Thailand’s relief measure on lowering interest rate from 28% to 25% to remedy Covid-19 impact.

Meanwhile, the car-title loans under “P Berm” brand have to compete with Srisawad Corporation Public Company Limited (SAWAD) that joined the Government Saving Bank (GSB) to penetrate the car-title loan business as well and take advantage of lower interest rate.

Not to mention Muangthai Capital Public Company Limited (MTC), Amanah Leasing Public Company Limited (AMANAH), Singer Thailand Public Company Limited and Saksiam Leasing Public Company Limited (SAK) that have similarity in the business as KTC’s. More importantly, Bank of Ayudhya Public Company Limited (BAY)’s famous subsidiary Ngern Tid Lor Public Company Limited (NTL) is expecting a listing in the Thai stock market this year as well.

The car-title loan business has 21% market share in non-bank business loans at a total business value of around 100 billion baht. A big chunk of cake, and of course, a big competition in the market as well.


This could be the reason for last week’s announcement in the acquisition of 75.05% stake in Krungthai Leasing Limited (Krungthai Leasing) from Krung Thai Public Company Limited (KTB). its parent company, at an investment value of 594 million baht to pave the way to leasing business.

Even though the leasing business also has high competition, the acquisition from KTB’s existing business will immediately increase KTC’s member base without needing to start from the beginning.

Moreover, members in the leasing business could someday turn into other services provided by KTC, such as credit loans, personal loans as well as car-title loans.


Speaking of the operating result of this new business, Krungthai Leasing has shown promising performance in the recent three years by consecutively booking an increase in net profit. The company recorded 68 million baht of profit in 2017, 273 million baht in 2018 and 316 million baht in 2019.

The earnings in 2019 is equivalent to roughly 6% of KTC’s net profit in 2020 at 5.3 billion baht, which is considerably high, to begin with, and equivalent to more than half of the investment made by KTC, in which the company will record this amount right off the bat, not to mention the further value that could bring to KTC in the future.


This might be a new path for KTC to create more value and bring the company back among “growth stocks,” eyed by a wide range of investors.