Credit card market ends 2012 at new high

Thursday, 7 March 2013 01:08 - - {{hitsCtrl.values.hits}}

The credit card market has completed 2012 on a new high, with an all-time record base nearing the one million mark and outstanding balance topping Rs. 44 billion.

The number of new cards issued in 2012 amounted to nearly 90,000 or 10.4% to 952,256. In 2011, the growth in the number of active cards was 11% or near 84,000. Last year also surpassed the previous highest active card base of 917,418 that prevailed in 2008. In 2011, the figure was 862,340.

Of the 952,256 cards, around 93.6% were globally accepted cards, slightly higher in comparison to 92.8% in 2011.

The outstanding balance of active cards continue to soar with 2012 increase being Rs. 6.8 billion or 18% to Rs. 44.44 billion. In 2011, the growth was 16% or Rs. 6 billion.The sustained high growth for credit card industry for the second consecutive year comes amidst challenging market conditions and consumer sentiments. In that context industry analysts have commended the 2012 performance whereas in 2011 the growth was after the market contracted in 2010.

In fact, in the early part of last year, some analysts were mixed over the future outlook given the rising trend in interest rates, slow down in economy, inflationary pressures and curtailed spending habits.

Therefore, the resilience in the credit card market is pinned to aggressive marketing as well as value offering by issuers as well as improving lifestyles of Sri Lankans, especially since the end of the war.

Whilst data for 2012 is pending, as per the Central Bank, in 2011, the value of transactions through the credit card payment system amounted to Rs. 93 billion, up 24% from 2010’s figure of Rs. 75 billion. The number of transactions rose by 13% to 18,609. In a related development, payments via debit cards, relatively new in comparison to credit cards, rose to Rs. 24 billion from Rs. 16 billion in 2010.

Debit card transactions rose to 8,346 from 5,340 in 2010. In 2011, with the intention of standardising the practices of credit card issuers, the Payment Card Industry Association of Sri Lanka (PCIASL) issued a common code of conduct for the card issuers, in consultation with the Central Bank.

In 2011, credit card users benefitted from lowering of interest rates to an average of 24%.

In 2010, the average interest rate charged on credit cards ranged between a low of 22% and a high of 36 for cash and 22% and 26% on credit.