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Philippines: Credit card acquisitions to increase as economy recovers
MANILA, Philippines — Issuers are expecting new credit card acquisitions starting the second half as the country gradually recovers from the impact of the pandemic.
Alex Ilagan, executive director at the Credit Card Association of the Philippines (CCAP), told The STAR the total number of credit cards in force is still lower in the second quarter due to the uncertainties brought about by the global health crisis, as well as the involuntary cancellations amid higher delinquency rate.
“We expect the pace of new card acquisition to accelerate toward the end of 2021 and in 2022 as the employment rate improves and the overall economy recovers,” Ilagan said.
The country exited the pandemic-induced recession with an 11.8 percent gross domestic product (GDP) growth in the second quarter.
The Philippines slipped into recession last year as the GDP shrank by a record 9.6 percent, ending 21 years of positive growth, after the government imposed the longest and strictest lockdown in the world, placing Luzon under enhanced community quarantine as early as mid-March last year.
Ilagan earlier said the delinquency rate of the credit card industry improved to 6.1 percent in end- June from 8.37 percent in end- 2020.
The dramatic increase in default rate last year was driven by the widespread loss of source of income and livelihood of credit cardholders, which is a direct consequence of the slowdown in economic activities due to the prolonged lockdown.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed credit card loans extended by big banks slipped by 2.5 percent to P400.11 billion in end-June from P410.41 billion in the same period last year.
This translated to an 8.6 percent drop in household lending to P818.96 billion from P895.59 billion.
Loans disbursed by universal and commercial banks contracted for the seventh straight month, albeit at a slower pace of two percent in June from four percent in May, as the spread of the Delta variant continued to temper the outlook for economic recovery.
Lending by big banks amounted to P9.09 trillion in end-June from P9.28 trillion in end- June last year.
Ilagan said total credit card receivables as of the second quarter are still lower compared to the same period last year, but is already on an upward trajectory compared to the first quarter.
“Total card billings as of the second quarter has also improved compared to the same period last year, which is understandable because 2020 included the long lockdown period of the enhanced community quarantine when cardholders were not allowed to go out and most merchant establishments were closed,” he said.
The group, he said, remains on the lookout to help credit card users experiencing difficulty amid the global health crisis.
CCAP has strengthened its #FightBudol campaign as the shift to the digital space amid mobility restrictions caused by the pandemic gave rise to fraudsters and more complex scams.
Source: https://www.philstar.com/business/2021/08/24/2122109/credit-card-acquisitions-increase-economy-recovers