New KTC chief firm on cutting ratio

He expects KTC will post record earnings next year and go on to become the market leader in the credit-card industry in 2014.

Rathian, who was promoted to chief executive officer on January 1, yesterday told a press conference that cost-to-income ratio reduction formed part of KTC’s three-year business plan for 2012-2014.

It should be a priority because KTC’s current ratio is 46-48 per cent, which is higher than the industry average and has affected the company’s bottom line. He said the company would bring down the ratio to 40 per cent this year, with a further reduction planned for 2013.

"Given the long-term competition in the industry, cost efficiency is essential for credit-card players and KTC must improve its cost-to-income to close to the ratio in the market," he said.

The CEO said that the results of cost-to-income ratio reduction would be seen in the third quarter of this year, falling in each quarter until the ratio is below 40 per cent in 2013.

Under the reduction plan, KTC will |manage the credit-card-linked information-technology system on its own, having previously used an outsourcing company in Australia to carry out the work. This will be funded as part of the investment budget of Bt900 million for this year.

The company will now also manage its own debt collection, call centre, direct sales and telesales instead of using outsourcing companies.

Such in-house management gives KTC more flexibility and the ability to offer tailor-made products to meet customer requirements, Rathian said.

"We found that our management during the flood crisis lacked flexibility because we had more outsourcing companies," he said.

He said next year would see a record net profit for KTC, exceeding the Bt650 million achieved in 2006.

The company will report its 2011 financial results next month, but the new chief executive said the bottom line would show a loss due to the severe floods and deferred tax.

Rathian said KTC aimed to become the market leader in the credit-card industry in 2014 both in terms of number of cards and spending, adding that it plans to acquire more related businesses during that year to ensure market leadership.

KTC will give importance to online credit-card marketing, which is a new trend and should be a key platform for plastic-card players, he said.

The company targets increasing the number of KTC-issued credit cards to 1.85 million this year, from 1.7 million last year.