Home Credit card Easing of credit card loans, billing up, says BSP

Easing of credit card loans, billing up, says BSP

BSP building

Bangko Sentral of the Philippines. (File Photo/Philippine Daily Inquirer)

According to the Bangko Sentral ng Pilipinas (BSP), the sustained double-digit growth rates in billings and credit card receivables add to signs that the Philippine economy is returning to pre-pandemic levels, with the sector still having a large room for growth.

BSP data shows that at the end of June this year, credit card billing growth accelerated to 41.4% from 29.5% in June 2021.

Additionally, credit card receivables – money that merchants have yet to receive from credit card issuers or processors – jumped 23.7% to recover from a contraction of 2. 2% observed a year ago.

In June, there were 10.7 million cards in circulation. In the first half of the year, the approval rate for new credit cards was 34.2%. BSP Deputy Governor Chuchi Fonacier said the growth rates show that credit card financing has been slowly gaining momentum, in line with the resumption of economic activities and confirming the resilience of the industry.

BSP Governor Felipe Medalla also noted that despite a difficult operating environment, the credit card industry has managed to grow its portfolio cautiously.

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

Medalla said double-digit loan growth has been sustained this year, with banks’ non-performing loan ratio declining to 5.7% of total loans, “a rate that brings us closer to pre-pandemic levels.”

The BSP chief said the bad debt ratio peaked at 10.1% in November 2020 and improved in part due to industry efforts to manage the quality of credit card receivables.

“Additionally, the growing popularity of digital finance transactions and the gradual shift to cash-saving bode well for the [credit card] the industry is moving forward,” Medalla said.

In addition, Fonacier commended the credit card industry for its assistance in efforts to extend the BSP’s temporary relief measures to individuals or businesses affected by the COVID-19 crisis.

“In addition to keeping finance charges within the BSP caps on credit card transactions, the industry has paved the way for restructuring credit card receivables,” she said.

—Ronnel W. Domingo INQ

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