Soured credit card loans easing, billings up, says BSP

Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)

Sustained double-digit growth rates for credit card billings and receivables are adding to signs that the Philippine economy is getting back to prepandemic levels, with the industry still having wide space for further growth, according to the Bangko Sentral ng Pilipinas (BSP).

BSP data show that as of end-June this year, the growth in credit card billings accelerated to 41.4 percent from 29.5 percent in June 2021.

Also, credit card receivables—money that merchants have yet to receive from credit card issuers or processors— jumped by 23.7 percent to turn around from a 2.2-percent contraction seen a year ago.

In June, there were 10.7 million cards in use. In the first semester, the approval rate for new credit cards was 34.2 percent. BSP Deputy Governor Chuchi Fonacier said such growth rates showed that credit card financing had been slowly gaining momentum in line with resumption of economic activities and affirming the resilience of the industry.

BSP Governor Felipe Medalla also noted that despite a challenging operating environment, the credit card industry managed to grow its portfolio in a prudent manner.

Medalla and Fonacier were both speakers at the 42nd anniversary celebration of the Credit Card Association of the Philippines on Monday.

Medalla said that double-digit growth in receivables has been sustained this year as banks’ nonperforming loans ratio eased to 5.7 percent of total loans, “a rate that brings us close to prepandemic levels.”

The BSP chief said the bad loans ratio peaked at 10.1 percent in November 2020 and has been improving thanks in part to the efforts of the industry to manage the quality of credit card receivables.

“Moreover, the increasing popularity of digital financing transactions and gradual shift to a cash-lite economy bode well for the [credit card] industry moving forward,” Medalla said.

Also, Fonacier commended the credit card industry for helping with efforts to extend the BSP’s temporary relief measures to individuals or businesses affected by the COVID-19 crisis.

“Apart from keeping finance charges within the BSP’s ceilings on credit card transactions, the industry led the way in restructuring credit card receivables,” she said.

—Ronnel W. Domingo INQ