MANILA, Philippines – Monthly billings from banks and card issuers jumped 34% to 100.6 billion pesos in 2021 despite subdued demand for credit cards in the second half of last year, according to Bangko Sentral ng Pilipinas (BSP).
The latest data indicated a slowdown in credit card business activity from June to December last year, with the number of cards issued and in circulation increasing by only 0.3% to 10.3 million in 2021. , with customers turning to alternative digital products.
With the resumption of commercial activities and the easing of mobility restrictions, BSP data showed that credit card receivables recorded an annual growth of almost 5% to reach 437.1 billion pesos in 2021 against 417. .66 billion pesos in 2020, although at a slower trend compared to last year.
“Banks and credit card issuers have also been able to maintain the asset quality of their credit card portfolios through intensified corrective and recovery actions,” the central bank said.
The credit card industry reported an improvement in the non-performing loan (NPL) ratio of 6.8% in 2021 after climbing to 8.9% in 2020 due to uncertainties caused by the pandemic.
This has been accompanied by a consistent record of NPL coverage ratios above 100% in 2021.
In addition to demonstrating prudent lending standards and the capping of interest rates and other charges, the sector posted a higher net income of 18.5 billion pesos last year.
The STAR reported last month that the Monetary Board had decided to maintain caps on credit card transactions under Circular 1098 issued in September 2020.
The maximum interest rate or finance charge on a cardholder’s outstanding credit card balance remains at 2% per month or 24% per year.
Similarly, the additional monthly rates that credit card issuers can charge on installment loans have been maintained at a maximum rate of 1%, while the maximum processing fee on the use of card cash advances credit were maintained at P200 per transaction.
BSP Governor Benjamin Diokno said the decision would continue to help ease the financial burden on consumers through affordable credit card pricing amid the ongoing pandemic.
“It will also allow BSP to assess the impact of improving macroeconomic fundamentals and easing mobility restrictions on the performance of the credit card industry,” Diokno said.
Going forward, the new finance secretary said the credit card industry intends to further reduce operating costs through digital transformation and process improvements, as well as maintain prudent lending standards.
According to the central bank, the caps on credit card transactions remain in place unless revised by the BSP.
“The BSP, however, will closely monitor domestic and external developments that will impact the state of credit card funding, the sustainability of credit card operations as well as the viability of banks and credit card issuers. credit card.