Debt Settlement Policy Puts Pressure on Thai Credit Card Providers

Credit card stock prices dropped in the morning session on Friday as the government is in the process of discussing the reduction of the credit card interest rate to be lower than 15% in accordance with the debt settlement policies.

Krungthai Card Public Company Limited (SET: KTC) led the decreasing trend by 1.60% to THB 46.00, a decline of THB 0.75 with a trading value of THB 37.21 million, while AEON Thana Sinsap (Thailand) Public Company Limited (SET: AEONTS) slid by 1.26% to THB 156.50, decreasing THB 2.00 with a trading value of THB 2.82 million.

Mr. Korakot Sawetkruttamat, Director of Kasikorn Securities PCL, stated that factors from the government’s debt settlement policies, monitoring the interest rate to not exceed 15% from the previous of around 16%, will affect the stock price of credit card providers to lose their interest income of at least 1%.

In addition, KTC is the key player in the credit card provider market. The 1% adjustment to the interest rate will cause KTC to lose its profit of THB 360 million per year, approximately 4-5% of profit loss from the base average profit of KTC at THB 7 billion per year.

As for another affected player, AEONTS, its profit will decrease by THB 390 million per year, approximately 10% of profit loss from the base average profit of THB 3-4 billion per year.

While it is necessary to follow further announcements from the government, these factors have put some psychological pressure on the aforementioned stocks.