In spite of the increase in credit card use in the past year, the Bangko Sentral ng Pilipinas (BSP) said that Philippine banks have reported fewer bad loans this year compared to the previous years.
In a statement released to the media, BSP Governor Felipe Medalla reported that “from a peak of 10 percent for non-performing loans (NPLs) in November 2020, the last data showed that the banks’ NPL has eased to 5.7 percent as of the end of July.” He added that the said rate was close to pre-pandemic levels.
For her part, Chuchi Fonacier, BSP Deputy Governor, said that NPLs or bad debts have gone down in spite of an increase in credit card use.
“Credit card billings grew 41.4 percent year-on-year in June 2022 compared to 29.5 percent growth in the same period last year,” Fonacier said.
According to the deputy governor, credit card receivables have also risen to 23.7 percent annually, higher than the 2.2 percent year-on-year contraction registered a year ago.
Timely assistance of credit card companies cited
In her statement, Fonacier also lauded how credit card companies in the Philippines have been helping borrowers who were adversely affected by the COVID-19 pandemic cope with their challenging economic circumstances.
“As of end-July 2022, majority of the restructured consumer loans were credit card receivables of about P6 billion, comprising a 56.3 percent share,” she said.
Alex Ilagan, Executive Director of the Credit Card Association of the Philippines (CCAP), shared that credit card companies are now doing their part in assisting distressed borrowers.
“As the effects of the COVID-19 pandemic linger, CCAP and its members will continue to work together in offering more liberal debt restructuring/forbearance programs to allow cardholders in financial distress [to] repay their obligations and regain good credit standing,” Ilagan said.
He adds that information campaigns to counter online/cyber fraud are now also being initiated by their organization.
Filipinos are now more open to doing cashless transactions
Data from VISA covering Filipinos and their payment transactions in 2021 showed that the drive toward cashless transactions has been accelerated by the COVID-19 pandemic.
In their study, it was learned that users of digital payment channels have risen to 84% in 2021, or a 5% increase from the 79% recorded the previous year.
The survey also found that in the Philippines, the preferred cashless channel was the mobile wallet (64%), followed by online card payments (52%), credit card payments at physical stores (44%), and QR-based payments (31%).
A large majority of Filipino respondents actually expect the Philippines to be cashless within the next 7 to 10 years, with payments being done through credit cards, debit cards, payment apps, and QR codes.