Banks’ credit card receivables jump 20% to P88.8B last year

Credit card users are still having trouble coping with their personal debts as past due receivables of the credit card industry continued to expand.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the credit card receivables of the entire banking sector amounted to P88.838 billion at the end of 2005, up by 19.62 percent from P69.25 billion over the same period in 2004 and from P76.1 billion at the end of the third quarter last year.

These numbers indicate a significant increase in credit card purchases as banks launched aggressive campaigns to widen their respective subscriber base, competing from the fastest growing sector of consumer lending.

Along with the widening use of credit cards, however, the BSP said the credit card industry also reported that past due receivables amounted P16.027, equivalent to 19.35 percent of total credit card receivables.

The end-December past-due receivables, however, showed marked improvement compared to the previous quarter and last year, due mainly to the faster increase in total credit card receivables.

The BSP reported that the CCR past due ratio was maintained at 19.4 percent as in the previous quarter but favorably lower than the 21 percent ratio last year.

The BSP said the ratio changed little because the growth of past due accounts continued to lag behind the rise in total CCRs.

Meanwhile, the ratio of past due CCRs to the combined non-performing loans (NPLs) rose to 8.4 percent from 7.2 percent in the previous quarter and from 5.5 percent last year.

Notwithstanding these developments, however, the share of past due CCRs to the total loan portfolio was maintained at less than a percent, i.e., 0.9 percent in the last two quarters of 2005 against 0.8 percent at end-December 2004.

The bulk of these CCRs continued to be held by U/KBs and their subsidiary credit card companies whose holdings accounted for 68.2 percent (or P56.5 billion) and 28.2 percent (or P23.3 billion), respectively. The remaining balance of 3.6 percent or P3.0 billion are held by TBs.

Significantly, the BSP reported that although thrift banks accounted for only P3 billion of total receivables, their portfolio showed the most dramatic improvement in terms of past due CCRs.

BSP data showed that the past due CCRs of thrift banks actually declined from P529 million at the end of 2004 to only P195 million at the end of 2005, a decline of 63.05 percent.

As a proportion of total CCRs, past due CCRs of thrift banks also declined from 20.47 percent of total receivables in 2004 to only 6.59 percent in 2005, a decline of 13.88 percent.