Credit-card spending rockets 21% year on year
Despite skyrocketing oil prices and political uncertainty, credit-card holders continue to flex the plastic, with the Bank of Thailand (BOT) recording 21.3-per-cent year-on-year growth in outstanding loans in June.
Despite only moderate growth in overall consumption, credit-card loans in June climbed to Bt153.8 billion. Lending through credit cards in the second quarter grew at the same pace as the first quarter. The number of new credit-card accounts also jumped to 10.48 million in the period, a rise of 14.4 per cent over the second quarter last year, and close to a 14.2-per-cent rise on the first quarter. Cards issued by commercial banks grew by 17.4 per cent in the quarter. BOT executives, however, dismissed concerns over the credit-card business, saying loans to cardholders had decreased after the central bank's prudent measures to cool down the business were introduced. Central bank deputy governor Tarisa Watanagase said she was not worried about the solid expansion as growth had slowed from 30 to 40 per cent in the past few years. Credit-card loans grew by 39 per cent in 2002, before decreasing to 33 per cent and 25 per cent in 2003 and 2004, respectively. The figure rose only 17 per cent in 2005. According to the BOT, total spending via credit cards in June alone was up 17.8 per cent from the same period last year, mainly due to a 21.6-per-cent increase in the number of cards issued by foreign branches. Spending on domestically issued cards increased 18.3 per cent while cash withdrawals were up 17.7 per cent year-on-year in June. Card use abroad rose 8.8 per cent on the same period last year. Tarisa said there was no risk from the growth of the business as cardholders were required to meet criteria proving their financial ability to pay debts. She agreed, however, that the business expansion should occur at an appropriate pace so as not to result in social problems as people struggled to pay back debts or too many non-performing loans (NPLs), which could weaken the banks' financial positions, Tarisa said. "If there are no serious problems, the business [should be allowed to] grow. However, we have been continuously cautious about [monitoring] it," she said, adding that NPLs held by credit-card issuers remained at 2 to 3 per cent. Krirk Vanikkul, BOT assistant governor, forecast that credit-card spending would slow down next year.
Anoma Srisukkasem The Nation
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