The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, said Tuesday it maintained the interest rate cap on credit card transactions to help ease people’s financial burden amid the lingering COVID-19 pandemic.
BSP Governor Benjamin Diokno said in a statement the Monetary Board decided to maintain the ceilings on credit card transactions under Circular No. 1098 dated Sept. 24, 2020.
The maximum interest rate or finance charge on the unpaid outstanding credit card balance of a cardholder remains at 2 percent per month or 24 percent a year. The monthly add-on rates that credit card issuers can charge on installment loans is retained at a maximum rate of 1 percent.
The maximum processing fee on the availment of credit card cash advances stays at P200 per transaction.
“The decision of the Monetary Board will continue to help ease the financial burden of consumers through affordable credit card pricing amid the ongoing COVID-19 pandemic,” Diokno said.
“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,” he said.
Latest credit card business activity data show that the demand for credit cards moderated in the second half of 2021 as customers shifted towards alternative digital products.
The number of credit cards grew by 0.3 percent to 10.3 million, while monthly card billings increased by 33.9 percent year-on-year to P100.6 billion in December 2021.
Credit card receivables grew by 4.9 percent year-on-year in December 2021.
Banks/credit card issuers were also able to maintain the asset quality of their credit card portfolios through intensified remediation and workout arrangements.
The non-performing loan ratio of the credit card industry registered a declining trend to 6.8 percent in December 2021 from 8.9 percent NPL ratio recorded a year ago.
This was accompanied by consistent recording of NPL coverage ratios above 100 percent which stood at 109.5 percent as of December 2021.
Banks/credit card issuers posted higher net income on their credit card operations of P18.5 billion in 2021, compared to 2020 level. This was, however, lower than levels recorded by the industry before the COVID-19 pandemic.
The credit card industry intends to further reduce operating costs through digital transformation and process improvements and maintaining prudent lending standards.
The ceilings on credit card transactions remain in effect unless revised by the BSP. The BSP said it would closely monitor evolving domestic and external developments that would impact the state of credit card financing, sustainability of credit card operations and viability of banks/credit card issuers.