Credit card operators face rising NPL rate

BANGKOK, 01 July 2015, (NNT) - According to Mr.Yuttachai Teyarachakul, Executive Director of Personal Financial Services, United Overseas Bank (Thai) Pcl., lower income credit card holders are at greater risk of contributing to Non-Performing Loans (NPLs).

In order to address the problem, he said UOB is to beef up its regulations in issuing new credit cards, as the local economy slows down. New card holders must have a minimum monthly income of 15,000 baht. In normal economic circumstances, the minimum income required to obtain a new credit card is 10,000 baht.

The bank issued up to 10,000 new credit cards per month during the first 5 months of this year. UOB is still likely to achieve its goal of issuing 120,000 new credit cards this year. The bank currently has about 700,000 card holders.

Mr.Yuttachai said UOB’s present reject rate of credit card applications is at 40-50 percent. The bank’s records show monthly credit card spending per person is at 4,000 - 5,000 baht.


-- NNT 2015-07-01

This rising NPLs is happening to the private sector issuing credit cards to the lower income group.

I hate to see the NPLs on those credit cards issued to taxi drivers and farmers.

Edited July 1, 201511 yr by trogers

Thats interesting as I applied for a credit card and was unable to get one even though my income is 10 times a month more that is required. Racism or discrimination I am not sure which yet.

Thats interesting as I applied for a credit card and was unable to get one even though my income is 10 times a month more that is required. Racism or discrimination I am not sure which yet.

I never cease to be amazed that so many expats think that since they have some decent earnings here, that they should automatically be granted a credit card, for which they would be refused in their home country. Any credit application is evaluated by risk assessment. As in your home country, they evaluate your income, years at present job, years at present address, ownership or rental accommodation, cash in local bank, net worth in Thailand, etc. . Do you honestly do that well in all these areas to qualify for credit ? It's the same process in the country where you come from !

It is neither racism nor discrimination that the bank feels you are a poor risk, even though you feel entitled. I know many cases of expats ( mostly Brits) who have run out on debts all over the world - why do I know? they love to brag and laugh about it when they have a beer.

Thats interesting as I applied for a credit card and was unable to get one even though my income is 10 times a month more that is required. Racism or discrimination I am not sure which yet.

I never cease to be amazed that so many expats think that since they have some decent earnings here, that they should automatically be granted a credit card, for which they would be refused in their home country. Any credit application is evaluated by risk assessment. As in your home country, they evaluate your income, years at present job, years at present address, ownership or rental accommodation, cash in local bank, net worth in Thailand, etc. . Do you honestly do that well in all these areas to qualify for credit ? It's the same process in the country where you come from !

It is neither racism nor discrimination that the bank feels you are a poor risk, even though you feel entitled. I know many cases of expats ( mostly Brits) who have run out on debts all over the world - why do I know? they love to brag and laugh about it when they have a beer.

they also assess your "residency" status as well if your not a PR or citizen..."Khun Paul" would easily get a "secured" credit card in Thailand, if he was prepared to deposit a secured amount equal to the limit on the card he applied for with the bank, but in most case of unsecured cards, the bank wants to see a work permit, thus establishing his legitimised residency, so rather confused as he stated his income 10X the amount required to qualify, so depositing the amount required on a secured CC should be easy then

This practice is not just unique in Thailand, I have an unsecured CC in Thailand as I work here on a WP, but in Singapore were my main accounts are I have to use a secured CC even though having plenty of pennies in the bank and the reason...I am not a Singapore Resident or WP holder and I don't reside in Singapore

so definitely not racism or discrimination, just proper due diligence on applicants, but its so easy just to blame racism fr everything isn't it, when one cant get their own way

Thats interesting as I applied for a credit card and was unable to get one even though my income is 10 times a month more that is required. Racism or discrimination I am not sure which yet.

I never cease to be amazed that so many expats think that since they have some decent earnings here, that they should automatically be granted a credit card, for which they would be refused in their home country. Any credit application is evaluated by risk assessment. As in your home country, they evaluate your income, years at present job, years at present address, ownership or rental accommodation, cash in local bank, net worth in Thailand, etc. . Do you honestly do that well in all these areas to qualify for credit ? It's the same process in the country where you come from !

It is neither racism nor discrimination that the bank feels you are a poor risk, even though you feel entitled. I know many cases of expats ( mostly Brits) who have run out on debts all over the world - why do I know? they love to brag and laugh about it when they have a beer.

I'm going to make a case for laying this credit card problem at the feet of Dr. Thaksin Shinawatra

Thaksin and increased credit cards in Thailand https://books.google.com/books?id=bqR1BwAAQBAJ&pg=PA286&lpg=PA286&dq=Thaksin+and+increased+credit+cards+in+Thailand&source=bl&ots=aNfLi7KOCV&sig=vP3tnliRrN7jcsA_qgAEsDTXNW0&hl=en&sa=X&ei=i1OUVY-IAYGtsQXYvoOoBg&ved=0CCsQ6AEwAg#v=onepage&q=Thaksin%20and%20increased%20credit%20cards%20in%20Thailand&f=false

Thaksin offers easy credit, credit cards for taxi drivers (notice the date. Thaksin was speaking, by direct link, for his puppet PTP) Addressing the problem of drivers being unable to get loans to buy taxis as they could not find a guarantor, Thaksin said his policies would allow fellow taxi drivers to cross guarantee for the loans, even though they were all borrowers. (who wouldn't love that?) http://www.thaivisa.com/forum/topic/466514-thaksin-offers-easy-credit-credit-cards-for-taxi-drivers/

Analysis: A "Thaksinomics" renaissance in Thailand "But critics said Thaksinomics was little more than pork-barrel politics and failed to substantially boost jobs or end a dependency on exports, which were equivalent to about 50 percent of total GDP in 2005, a ratio that is now about 65 percent.

The cheap credit also drove household debt as a percentage of income above 57 percent from below 50 percent in 2001." http://www.reuters.com/article/2011/06/30/us-thailand-election-economy-idUSTRE75T0SW20110630

“(Thaksin’s) Government also sought ways to mobilize dormant funds in the commercial banking system for this credit-driven system. In 1999, interest rates had fallen to historically low levels as a result of excess liquidity both locally and worldwide. After a slight hump in 2001, engineered to deter capital exit, rates declined still further in 2002. Several banks looked to consumer lending and other forms of private credit as a way to deploy their excess deposits. From early 2002, such loans increased rapidly. Foreign firms like G.E. Capital opened specialty consumer loan business. (The Thaksin) Government eased credit card regulations resulting in the launch of several low-end cards and an increase in the total number of cards from 3 million to 6 million (20 January 2004). Consumer debt increased for housing, automobiles, other durables, and credit card usage.” https://books.google.com/books?id=bPjRk3FMEJwC&pg=PA106&lpg=PA106&dq=Thaksin+and+increased+credit+cards+in+Thailand&source=bl&ots=AGRy-ziF3T&sig=HPkGL2zgKOp9CX0O6t9vwsG3g6Y&hl=en&sa=X&ei=i1OUVY-IAYGtsQXYvoOoBg&ved=0CCcQ6AEwAQ#v=onepage&q=Thaksin%20and%20increased%20credit%20cards%20in%20Thailand&f=false

So by making Thai people debt slaves, he 'improved' the Thai economy in the same way his PTP 'improved' Thailand under Yingluck's administration. Smoke and mirrors come to mind.

.

Edited July 1, 201511 yr by rametindallas

They issue a credit Carr to people on 10k? And wonder why they have default?

Only 2 weeks ago, I saw a report that Credit card spending had risen fron an average spend of 6,000 Baht / month to 8,000 Baht / month. ( as the report stated, an 11% increase ???? ).

The concern is that the banking Sector now has NPL loans that are reaching high proportions, both in the public sector and in the business sector, causing many financial institutions to question the quality of the assets the banks hold..

The business sector here in Thailand has a very high proportion of " 1 man band " business,s such as food stalls, gardening guys, Mini Marts, the local Electician guy.Etc Etc Etc

They all work for cash, and show no Invoices or Receipts for the work they have undertaken.

Yet for some reason, many of these people have credit cards ?, when they can show no tangable proof of income.

The issuers of these cards, deserve everything that is coming to them in the form of NPL,s, unfortunately, the rest of society will also suffer for their initial greed.