Chinabank sees double-digit growth in credit card loans

CHINA BANKING Corp. (Chinabank) expects its credit card loans to grow by double digits this year and next as the Philippine central bank’s policy easing cycle is seen to spur consumer spending.

“We don’t have the definite plans yet for 2024 and 2025, but it will definitely be double-digit [growth] for this year and next year, and maybe even in the next five years,” Chinabank Executive Vice-President and Consumer Banking Segment Head Aloysius C. Alday, Jr. told reporters on the sidelines of a credit card launch event on Thursday.

Chinabank’s consumer loans are expected to continue posting double-digit growth this year, supported by the Bangko Sentral ng Pilipinas’ (BSP) easing cycle, he said, adding that consumer loans currently make up about 25% of the bank’s total loan portfolio.

“It’s supposed to encourage more activity, particularly in the real estate segment. Now, it’s more affordable to have financing as well as it will propel economic activity, hopefully. So, in terms of consumer loans, it can be translated to more activities. And we can service more individuals needing financing because now it can be more affordable,” Mr. Alday said.

The BSP on Wednesday cut benchmark interest rates by 25 basis points (bps) amid manageable inflation, bringing its policy rate to 6%.

The Monetary Board has now lowered borrowing costs by a total of 50 bps since it began its easing cycle in August with a 25-bp cut.

BSP Governor Eli M. Remolona, Jr. signaled the possibility of another 25-bp cut at the Monetary Board’s last meeting for the year on Dec. 19, which would bring the policy rate to 5.75% by end-2024.

He added that a 50-bp reduction in December would be “too aggressive a cut” and would only be possible in a hard-landing scenario.

For 2025, Mr. Remolona said they could slash borrowing costs by 100 bps.

Chinabank has been diversifying its credit card product portfolio to tap different market segments and grow its presence in consumer banking. On Thursday, the bank launched its first ever Visa-powered credit card.

“The objective of Chinabank in introducing new cards is really to service more consumers.

We would like to further grow our presence in consumer banking because we’ve always been known to be a businessman or a corporate bank. So, we started with destinations, targeting travelers. This time around, we’re looking at targeting not entirely women, but those who are into pursuits — independent, corporate-thinking, working women,” Mr. Alday said.

Holders of the new Chinabank Velvet Signature card will receive rewards after reaching certain spending requirements, cashback, and discounts of up to 50% off on shopping, beauty, and wellness through exclusive deals. The new card is crafted from recycled plastic.

Mr. Alday added that the bank will continue to release card products in partnership with Visa.

The bank is also looking to target the younger generation, he added, and will launch a new app next month as part of this bid.

“For credit cards, the young market is still growing because this is a lending product. So, the tendency is to have credit history and also credit knowledge, the younger ones will probably have to learn how to handle credit first before they endeavor into credit cards. The majority [of clients] is still maybe Gen X. The millennials are soon to be part of it because they’re joining the workforce,” Mr. Alday said.

Chinabank booked an attributable net income of P5.53 billion in the second quarter, down by 4.75% year on year. This brought its first-half net income to P11.44 billion, up by 5.65% year on year.

The bank’s shares inched down by five centavos or 0.08% to end at P60.15 apiece on Thursday. — A.M.C. Sy