Credit card billings up 34% to P101 billion in 2021

MANILA, Philippines — Monthly billings of banks and card issuers jumped by 34 percent to P100.6 billion in 2021 despite the moderate demand for credit cards in the second half of last year, according to the Bangko Sentral ng Pilipinas (BSP).

Latest data pointed to slower credit card business activities from June to December last year, with the number of issued and outstanding cards rising by only 0.3 percent to 10.3 million in 2021 as customers shifted to alternative digital products.

With the resumption of business activities and easing of mobility restrictions, data from the BSP showed credit card receivables recorded a year-on-year growth of close to five percent to P437.1 billion in 2021 from P417.66 billion in 2020, although at a slower trend compared to last year.

“Banks and credit card issuers were also able to maintain the asset quality of their credit card portfolios through intensified remediation and workout arrangements,” the central bank said.

The credit card industry reported an improved non-performing loan (NPL) ratio of 6.8 percent in 2021 after climbing to 8.9 percent in 2020 due to uncertainties brought about by the pandemic.

This was accompanied by consistent recording of NPL coverage ratios at above 100 percent in 2021.

In addition to demonstrating prudent lending standards and the cap on interest rates and other charges, the industry posted a higher net income of P18.5 billion last year.

The STAR reported last month that the Monetary Board has decided to maintain the ceilings on credit card transactions under Circular 1098 issued in September 2020.

The maximum interest rate or finance charge on the unpaid outstanding credit card balance of a cardholder remains at two percent per month or 24 percent per year.

Likewise, the monthly add-on rates that credit card issuers can charge on installment loans was retained at a maximum rate of one percent, while the maximum processing fee on the availment of credit card cash advances was maintained at P200 per transaction.

BSP Governor Benjamin Diokno said the decision would continue to help ease the financial burden of consumers through affordable credit card pricing amid the ongoing pandemic.

“It will also allow the BSP to assess the impact of the improvement in macroeconomic fundamentals and easing of mobility restrictions on the performance of the credit card industry,” Diokno said.

Moving forward, the incoming 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 ceilings on credit card transactions remain in effect unless revised by the BSP.

“The BSP, however, will closely monitor evolving domestic and external developments that will impact the state of credit card financing, sustainability of credit card operations as well as the viability of banks and credit card issuers.