Banks’ soured credit card exposure going down
By Doris Dumlao
Philippine Daily Inquirer
First Posted 01:21:00 09/02/2008
Credit card delinquency in the Philippines declined in March, with the banking sector’s soured credit card exposure now at P0.10 out of every P1.00 in receivables as compared to about P0.14 a year earlier, the central bank said Monday.
This developed as the banking system’s credit card receivables sustained a double-digit growth of 19.7 percent over a year ago to hit P115.4 billion at end-March.
Credit card lending is a key component of consumer lending, a growing source of revenue for many banks.
The other major component, auto lending, declined by 1.0 percent at end-March to P73 billion from a year earlier. The decline was attributed by the central bank to certain changes in the financial reporting of auto loans. Banks are now asked to segregate loans granted to individuals from those extended to corporations.
Credit card receivables in the first quarter this year fell by 0.6 percent from the previous quarter that ended December 2007, reflecting the slowdown in economic growth this year.
Soured credit card exposure, however, declined by 28.8 percent in the first quarter from the level in the previous quarter.
Analysts said banks might have become more prudent in issuing credit cards. Also, they said consumers might have become more responsible in managing credit card debts, cognizant of the consequences of having a bad credit history.
Commercial banks cornered 81 percent of the credit card business in terms of volume of receivables. Subsidiaries of commercial banks held 14.8 percent while thrift banks held the remaining 4.1 percent.
Credit card lending accounted for about 5.4 percent of the banking system’s total loan portfolio.
In the meantime, nonperforming auto loans rose to 5.7 percent of total lending from 5.1 percent a year ago.
In terms of volume, there was also a 14.2-percent decline in auto lending at end-March from end-December level. This brought down the ratio of auto loans to the banks’ total loan portfolio to 3.5 percent from 4.0 percent in the previous quarter.
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