Krungthai Card Public : Q2/2022

Executive Summary

"In 2Q22 and 1H22, KTC could The separate financial statements of Krungthai Card PCL. ("KTC" or

continue to gain profits, up 12.7% "Company") showed 2Q22 and 1H22 net

and 9.9% respectively." profits of Baht 1,870 million and Baht 3,621 million respectively while the consolidated financial statements reported 2Q22 and 1H22 net profits of Baht 1,894 million and Baht

3,641 million respectively, marking an increase of 12.7% and 9.9% from the same period in 2021 that recorded net profits of Baht 1,680 million and Baht 3,314 million respectively.

Due to economic recovery buoyed by easing of the country's entry rules, total receivable increased 6.3% (YoY) while loan to customers and accrued interest receivables amounted to Baht 95,069 million, up 2.6% from 2021 year-endamount of Baht 92,636 million.

"Credit card spending volumes of the industry and KTC in the first 5 months grew 18.5% and 15.3% (YoY) respectively.

These volumes exceeded the pre-COVIDlevel in 2019."

The volume of KTC's card spending in the first half this year grew 16.6% or amounted Baht 109,782 million, which already exceeded the level of pre-COVIDperiod (1H21 was Baht 100,282 million). It is noted that opportunities for further expansion are abound as Thailand and other countries will gradually open-up.

In 2Q22, the Company recorded a total revenue of Baht 5,735 million, gained 6.1% (YoY), with contributions from higher interest and fee incomes that rose 3.6% (YoY) and 15.1% (YoY) respectively. In 1H22, the Company recorded a total revenue of Baht 11,091 million, up 2.7% (YoY). The amount of bad debts recovered in 2Q22 and 1H22 totaled Baht 851 million and Baht 1,708 million respectively; these amounts were still higher than those in the same period last year.

Total expenditure in 2Q22 amounted to Baht 3,359 million, up 2.5% (YoY). Such an increase was due to higher administrative expenses that went up 11.9% (YoY). Meanwhile, expected credit losses and cost of fund dropped 9.2% (YoY) and 7.0% (YoY) respectively. In 1H22, the Company recorded a total expenditure of Baht 6,539 million, down 1.1%. Such a decrease was due to reduction of expected credit losses and cost of fund by 10.6% (YoY) and 7.6% (YoY) respectively. However, administrative expenses rose 6.4% (YoY).

In 2Q22, KTC satisfactorily expanded credit card and personal loan portfolios. P BERM loan had consistently grown in this period, even though it was slower than expected. As the Company still focused on maintaining portfolio quality, it succeeded in reducing bad debt and write-off.However, higher spending on new member acquisition and marketing promotions was regarded as investment in portfolio expansion as well as income and profit generation in the long run. Moreover, the Company was also focused on the right balance between revenue and expenditure by maintaining cost of fund at nearly the same level and building portfolios with appropriate risk and revenue relationship. As a result, the Company could achieve consistent profit growth.

Management Discussion and Analysis of Krungthai Card Public Company Limited Financial Statement 2Q2022 (Unreviewed) | 1

Operating's Result for 1H22 and 2Q22

1H22 Financial Statement:

			Consolidated Financial Statement			Separate Financial Statement
			1H2021			1H2022			Growth			1H2021			1H2022			Growth
	(Unit: Million Baht)						(%YoY)							(%YoY)
	Total Revenues	10,798	11,091		3%	10,645		10,989			3%
	Bad Debt Recovery	1,686		1,708		1%	1,645		1,678		2%
	Total Operating Cost	3,555		3,784		6%	3,447		3,744			9%
	Finance Costs	726	671		(8%)	721		667		(8%)
	Profit (Loss) from Associate	5		8		58%	-		-		-
	Company
	Profit before Expected Credit Loss		6,522			6,645			2%			6,477			6,578			2%
	Expected Credit Loss	2,331		2,084		(11%)	2,341		2,044			(13%)
	Bad Debt	2,552		1,.962		(23%)	2,507		1,837		(27%)
	Doubtful Accounts (Reversal)	(221)		122		155%	(166)		207		225%
	Profit before Income Tax		4,191			4,560			9%			4,136			4,534			10%
	Income Tax Expense	839		915		9%	830		912		10%
	Net Profit		3,352			3,645			9%			3,307			3,621			10%
	Total Comprehensive Income (Loss)
	Owners of the parent	3,314		3,641		10%	3,307		3,621		10%
	Non-controlling interests	38	4		(89%)	-		-		-
	Earning per Shares		1.29			1.41			10%			1.28			1.40			10%
	2Q22 Financial Statement:
			Consolidated Financial Statement			Separate Financial Statement
			2Q2021			2Q2022			Growth			2Q2021			2Q2022			Growth
	(Unit: Million Baht)						(%YoY)							(%YoY)
	Total Revenues	5,406	5,735		6%	5,325		5,678		7%
	Bad Debt Recovery	833		851		2%	811		837		3%
	Total Operating Cost	1,775		1,986		12%	1,734		1,989			15%
	Finance Costs	359		334		(7%)	356		332		(7%)
	Profit (Loss) from Associate	3		4		33%	-		-		-
	Company
	Profit before Expected Credit Loss		3,274			3,419			4%			3,234			3,357			4%
	Expected Credit Loss	1,144		1,039		(9%)	1,137		1,014			(11%)
	Bad Debt	1,321		970		(27%)	1,284		849			(34%)
	Doubtful Accounts (Reversal)	(177)		69		139%	(147)		165			212%
	Profit before Income Tax		2,130			2,380			12%			2,097			2,343			12%
	Income Tax Expense	428	479		12%	422		474			12%
	Net Profit		1,703			1,901			12%			1,674			1,870			12%
	Total Comprehensive Income (Loss)
	Owners of the parent	1,680		1,894		13%	1,674		1,870			12%
	Non-controlling interests	23	7		(70%)	-		-		-
	Earning per Shares		0.65			0.73			12%			0.65			0.73			12%
			Management Discussion and Analysis of Krungthai Card Public Company Limited
									Financial Statement 2Q2022 (Unreviewed) |	2

Total portfolio expanded along with the recovery of overall economy

Satisfactory growth of credit card spending

Maintaining net interest margin

In 2Q22, gross loan receivables and accrued interest receivables totaled Baht 95,069 million, up 6.3% (YoY). This amount was broken down into credit card receivables worth Baht 61,426 million, up 10.3% (YoY), personal loan receivables worth Baht 30,460 million, up 3.3% (YoY), and lease receivables worth Baht 3,184 million, down 25.2% (YoY).

Moreover, total new booking loans of KTC P BERM and KTBL in 1H22 totaled Baht 525 million, and monthly growth trend had been evident since early this year. In 2Q22, total new booking loans grew 22.9% (QoQ), but its growth was much slower than estimates. Consequently, the Company was compelled to hasten the pace of expansion in the remaining of the year.

Economic activities have been resuming gradually in tandem with relaxation of restrictions until early July when Thailand has fully reopened with an aim to spur local spending. As a result, the Company's overall volume of credit card spending had returned. Therefore, in 1H22 total spending volume was equivalent to Baht 109,782 million which exceeded the amount in the pre-COVID compared to 1H21 spending volume which equaled to Baht 100,282 million.

In 2Q22 and 1H22, the Company's credit card spending volume grew 25.8% and 16.6% (YoY), amounted to Baht 57,535 million and Baht 109,782 million respectively; however, its card membership base shrank 1.8% (YoY) or overall membership base of 3.3 million accounts, including 2,525,367 credit cards, decreased by 0.8% (YoY), and 756,960 personal loan accounts, decreased by 5.1% (YoY).

Over the five-month period in 2022, the volume of KTC's credit card spending grew 15.3%, compared to industry growth of 18.5% YoY. It is noted that the volume of KTC's credit card spending in April, May and June grew 22.0%, 32.6% and 23.1% respectively in tandem with industry growth trends, resulting from economic recovery and relaxed restrictions.

The Company could implement efficient financing cost which generated cost of fund in 2Q22 and 1H22 at 2.4%, a decrease from 2.6% compared to the same period last year. Meanwhile, the average of interest income stood at 15.1% and 14.6%, marking a decrease from the rates of 15.3% and 15.2% respectively in the same period last year. Therefore, the net interest margin in 2Q22 and 1H22 was 12.7% and 12.2% respectively.

The portfolio quality continuously improved

The non-performing loans to total gross loans ratio (%NPL) in 2Q22 stood at 3.5%, marking a decrease from 3.6% and 4.4% of the 1Q22 and 2Q21 respectively. Non-performing loan ratios of credit cards, personal loans, and lease receivables stood at 1.2%, 2.8% and 54.0% respectively. (NPL ratios of leasing were

Management Discussion and Analysis of Krungthai Card Public Company Limited Financial Statement 2Q2022 (Unreviewed) | 3

outcomes of consolidation of existing KTBL portfolio. However, NPL ratios of only new booking portfolios of P BERM and KTBL were below industry.) The Company still maintained a satisfactory level of stringent debt collection activities, which have been conducted regularly.

NPL	3.5%	2Q2021

1Q20222Q2022

				%Total
		NPL
			Receivables
Total NPL		3,879		4.4%
NPL - Credit Card		808		1.5%
NPL - Personal Loan		869		3.0%
NPL - Leasing		2,202		51.7%

NPL	% Total
Receivables

3,206 3.6%

1. 1.2%

1. 2.6%

1,774 56.2%

NPL	%Total
Receivables

3,270 3.5%

1. 1.2%

1. 2.8%
   1,718 54.0%

Bad Debt Recovery

851 2%

(Million Baht)

YoY

Allowance for expected credit loss to NPL still remained high

The Company was able to maintain good debt collection capability, total bad debt recovery for 2Q22 equaled to Baht 851 million, comprising of KTC at the amount of Baht 837 million, increased 3.1% (YoY) and from KTBL at the amount of Baht 14 million.

In 2Q22, the Company's allowance for expected credit losses in the consolidated financial statements amounted to Baht 9,814 million, marking a marginal increase of 0.8% (YoY). In the separate financial statements, such allowance amounted to Baht 7,556 million, an increase of 5.1% (YoY) compared to the same period last year. The key factor was attributed to allowance for expected credit losses from personal loans that went up 9% (YoY). NPL coverage ratio in 2Q22 was recorded at 487.0% and 300.1% in the separate and consolidated financial statements respectively.

Management Discussion and Analysis of Krungthai Card Public Company Limited Financial Statement 2Q2022 (Unreviewed) | 4

Key Financial Ratio

Net Profit Margin (Unit: %)

	27.4	30.7	32.8
24.2
2020	2021	1H21	1H22

Debt to Equity (D/E) Ratio

(Unit: Times)

2.9	2.3	2.5
	2.2
2020	2021	1H21	1H22

Gross Profit Margin (Unit: %)

88.3	88.4	88.5	88.2
2020	2021	1H21	1H22

Interest Coverage Ratio

(Unit : Times)

		6.8	7.8
5.3	6.1
2020	2021	1H21	1H22

			Y2020			Y2021			1H2022			1H2022
	Key Financial Ratio		(Original)
			(Consolidated)			(Consolidated)			(Separate)			(Consolidated)
	Earnings per Share (Baht)	2.07		2.28		1.40		1.41
	Book Value per share (Baht)	8.9		10.5		10.8		10.9
	Cost to Income	32.9%		34.2%		34.1%		34.1%
	Operating Cost to Income	25.4%		27.3%		25.7%		25.8%
	NPL Coverage Ratio	460.4%		292.2%		487.0%		300.1%
	Expected Credit Loss/Total Receivables	7.3%		5.9%	4.4%		4.4%
	Allowance for Expected Credit	8.2%		10.5%	8.2%		10.3%
	Loss/Total Receivables
	Return on Equity (ROE)(1)	25.0%		23.5%		26.4%		26.6%
	Return on Asset (ROA)	6.1%	6.6%	8.1%	8.1%
	Dividend Payout Ratio	42.5%		41.2%			N/A		N/A

Remark:

1. Calculation of "ROE" based on average equity attributable to owners of the parent since 1Q2022 onwards

Management Discussion and Analysis of Krungthai Card Public Company Limited

Financial Statement 2Q2022 (Unreviewed) | 5