JAKARTA: The country’s largest private lender Bank Central Asia (BCA) is expecting to boost its credit card business amid the economic slowdown, which has significantly reduced consumer purchasing power.
BCA consumer banking director Henry Koenaifi said the lender was targeting a 5 percent to 6 percent increase in its credit card business this year.
As of December last year, the number of credit cards issued by the lender stood at 2.58 million, and its total number of credit cards by early September amounted to around 2.68 million.
“It’s not easy to issue more [credit cards] given the rules that limit the number of credit cards each consumer can own. The base [credit card number] is already high anyway,” Henry told The Jakarta Post on Friday.
BCA consumer card head Santoso added that the bank aimed to have 2.72 million credit cards in circulation by the end of the year.
Bank Indonesia (BI) has issued a regulation to limit the number of credit cards that consumers may have. The limitation on credit card ownership is based on age and income.
According to the regulation, which became effective this year, consumers earning between Rp 3 million (US$203.96) and Rp 10 million per month may only have two credit cards from separate banks.
Meanwhile, Santoso said that the bank was eyeing 13 percent to 14 percent credit card transaction growth in the third quarter of the year, as its current monthly transactions stood at Rp 4 trillion.
“The main driver will be the use of new credit cards,” he said as quoted by kontan.co.id.
Several business sectors had helped increase the transaction volume, including the automotive, travel and healthcare sectors, he said.
“There has been an increase in automotive spare part transactions. People might wait to buy new cars, but as their vehicles need to be taken care of, the use of the credit cards has also increased,” Santoso added.
The bank recorded Rp 46.1 trillion in credit card transactions in 2014.
Analysts have predicted that Indonesian consumers will postpone or cut down their spending on big-ticket items amid the economic slowdown and the weakening rupiah.
The country booked 4.67 percent gross domestic product (GDP) growth in the second quarter of the year, a slight decrease from 4.7 percent in the first quarter and the lowest level in six years.
There were also significant declines in the fashion and retail sectors, according to Santoso.
“It’s due to people’s weaker purchasing power,” he said.
Meanwhile, with the boost in credit card transactions, the ratio of non-performing loans (NPL) has also risen to 1.7 percent in August, from 1.48 percent in May.
BCA hopes to keep the NPL at 1.5 percent this year.
“The credit card NPL is still manageable. Last year, the NPL for credit cards was only at 1.3 percent to 1.4 percent, because periodically we will increase our debt collection and conduct write-offs,” Santoso said.
All of BCA’s lending segments, including corporate and consumer, grew by less than 10 percent year-on-year during the first half, having grown by double digit figures last year, according to its financial report.
With the current conditions, BCA has maintained its target of seeing its outstanding loans increase by 12 percent this year.
The bank’s total outstanding loans remain stagnant at around Rp 347 trillion from January to June, merely up 7.9 percent compared to the 14.6 percent annual growth it posted on the same period last year.
Meanwhile, its consolidated net profits grew by 8.8 percent on an annual basis to Rp 8.5 trillion in the first half of the year, from Rp 7.8 trillion last year.
