28% growth in credit card loans – Journal
KARACHI: Bank advances through credit cards rose 28% to 53 billion rupees in April, from 42 billion rupees the same month a year ago, according to the latest data released by the State Bank of Pakistan (SBP) Saturday.
However, progress is nowhere near the dramatic rise in auto finance which reached a record high of Rs292.6bn in April, breaking the previous record of Rs285bn reached in March 2019. In April 2020, auto finance was recorded at 214.5 bn. The growing growth in auto loans shows a growing appetite for auto acquisition in the country as consumers are drawn to lower interest rates.
Auto finance hits record Rs 292.6 billion in April
During the period under review, personal loans and financing of housing construction also increased.
Talk to Dawn, bankers and market analysts have expressed divergent views on the reluctance of banks to offer credit card loans or other reasons for this weak growth.
“One of the main reasons for the slow growth in credit card volume is that banks are charging 22-40% higher interest rates,” said Samiullah Tariq, research director of Pak Qatar Investment and Development Company.
“Automobiles are financed at interest rates of 11-12% while personal loans are offered at 15-20%,” he added.
While not agreeing that banks are reluctant to offer credit cards, he said interest rates are high and people only take the risk of getting cards. urgent need. Mr Tariq estimated that the number of credit card holders in the country hovered between 1.5 and 2 million nationwide.
Meanwhile, Shankar Talreja, a research analyst at Topline Securities, said that as of December 2020, there were 1.69 million credit cards in circulation in Pakistan, up 2.9% from 1. 64 million a year ago.
“Credit card growth exceeds total private sector loan growth by 5%.” Mr. Talreja added.
Some private bankers, who asked not to be named, said the charge on credit cards had actually declined due to the rise of the Covid-19 pandemic. The purchasing power of people has declined since the start of the pandemic, they estimated. People are cautious about spending, as the salaries of many employees have been cut in some areas and luxury spending has fallen, they added.
According to SBP data, home construction loans reached Rs 95.5 billion in April from Rs 86 billion a year ago. Personal loan figures reached 230 billion rupees in April from 195 billion rupees in the same period last year, according to data from the SBP.
Posted in Dawn on May 30, 2021