Credit card receivables rise 19.7% in 1st qtr

Credit card use continued to surge in the first quarter of this year, with receivables rising by 19.7 percent to P115.4 billion from a year ago level.

The Bangko Sentral ng Pilipinas (BSP) reported a continued increase in credit card receivables in the first quarter, with past due accounts dropping by 14.2 percent from a year ago.

As a result of the increase in total credit card receivables (CCR), the BSP said the ratio of CCRs to the total loan portfolio of banks rose to 5.4 percent from five percent in the same period last year.

According to BSP Governor Amando M. Tetangco Jr., U/KBs accounted for the biggest slice of the total CCRs at 81.1 percent. Credit card subsidiaries of U/KBs accounted for14.8 percent while non-linked TBs accounted for 4.1 percent or P4.7 billion.

But the BSP noted a significant decline in the proportion of past due CCRs to total CCRs which dropped 28.8 percent to P11.8 billion compared with the previous quarter.

As a result, the ratio went down to 10.2 percent from 14.2 percent in the previous quarter and also the first quarter last year.

The BSP said the improvement in the ratio was due to the 28.8 percent decline in non-performing CCRs which outpaced the 0.6-percent contraction in total CCRs, quarter-on-quarter.

Tetangco said the P11.8-billion past due CCRs accounted for 8.8 percent of the total non-performing loans of banks, dropping from 12.5 percent in the previous quarter and coming back closer to year-ago level of 8.9 percent.

On the other hand, the proportion of non-performing CCRs to the total loan portfolio of banks was 0.6 percent, down from 0.8 percent in the previous quarter and 0.7 percent last year.

These numbers reflect the increase in credit card subscription as well as credit card use while also indicating an improvement in the way plastics users manage their credit card use.

Credit card companies at the time had also started to bring down the cost of using plastic money to reflect the decline in interest rates in 2007 when the BSP was on an easing cycle.

The BSP has expressed concern that credit card rates were failing to adjust to market forces to the detriment of consumers using plastic currency, saying there was a disjoint between prevailing interest rates and the effective rates on credit card loans.

The industry responded by offering various products that were easier and cheaper to use although the rates still did not reflect the individual creditworthiness of plastics users in the absence of a centralized database that would allow credit card companies to treat subscribers differently.