News: Security Bank sees increased consumer spending -
20 Apr 2008
DESPITE a bleak outlook on the global economy, Security Bank and Trust Co. sees increased consumer spending in the Philippines, which would help boost its credit-card business.
In an interview with select reporters, Security Bank chief finance officer Carlos Borromeo said this optimism pushed the bank’s decision to launch its newest credit-card product, Platinum MasterCard.
He said the credit-card market in the Philippines remains “undertapped,” adding that more Filipino consumers are turning to plastic for “financial flexibility” in order to pay their bills.
He said the bank issued 60,000 new credit cards last year, but declined to reveal the exact number of credit-cardholders. He also did not want to make any projections on the growth of its credit-card business this year.Data from the Bangko Sentral ng Pilipinas as of September 2007, showed credit-card receivables of the entire banking system jumped by 23 percent to P106 billion from September 2006. Universal banks and commercial banks accounted for roughly P85 billion or 80 percent of total credit-card receivables.
Despite the rising credit-card debt of Filipinos, the same data indicates their financial discipline as past due receivables only grew by 14.3 percent in the third quarter of 2007, compared to the 19.3-percent rate in the same quarter in 2006.
No data was available, however, on total credit cards issued by the banking system.
For Security Bank alone, Borromeo boasted “a relatively lower-than-industry standard default rate,” of about 7 percent, compared to the 14-percent average for the entire banking industry.
He traced this to meticulous procedures the bank employs in evaluating credit-card applications, as well as its focusing on specific target markets. Platinum MasterCard, for example, is geared toward the “affluent.”
Borromeo said the release of the new card was intended to strengthen Security Bank’s position in the commercial credit card industry among the community’s “well-heeled”.
“The past eight to 10 years have been changing largely due to the contribution of the growing middle-class or mass affluent,” he said. The card itself will feature more personalized services: access to 24-hour concierge services, travel and accident insurance of up to P12 million, accident medical expense of up to P500,00, travel incentives, mileage incentive and higher credit limits are among of the benefits for these cardholders.
With other commercial banks such as Banco de Oro and Citibank having released their own versions of platinum cards, Security Bank is prepared for some tough competition, according to Andrew Cajucom, vice president for marketing, SBC.
He said Security Bank released its own platinum credit card to be able to increase their market share in the more affluent market of platinum card holders as other banks have already released such cards ahead of them.The last time they released a credit- card product to the public was the Security Bank Gold and this was still in 2004. The market since then has become more specialized and the consumers more discerning; hence, the creation of a new-premium card.
Cajucom also doesn’t see rising inflation as a problem for their new card as their target clients are more affluent.
Cajucom disclosed that as of today, there are about 200,000 security bank cards being used, but with the introduction of the platinum card, and other future products, the bank expects to increase this number by about 500,000 cards in 2011.
Source: Business Mirror, By Stella Arnaldo and Miguel Camus, 4/19/2008