13 February 2023 03:02 am Views - 2224
- Banks issued just 1,174 new cards and 25,796 cards for the full year
The total outstanding credit card balance continued to climb in December 2022, though slower than a month ago,
Data showed that in December, the outstanding credit card balance rose by Rs.2, 675 million while private sector credit continued to shrink at a faster rate. In November, card balance rose by Rs.3,721 million.
The private sector credit fell by Rs.72.6 billion in December, accelerating from the Rs.30.9 billion decline seen in November reflecting the extent to which the credit markets have shrunk.
After the December expansion, licensed commercial banks had a total outstanding credit card balance of Rs.143.1 billion.
For the full-year, such credit grew by Rs.9,813 million, a much slower pace than what was seen in previous years.
People cut down on credit card spend as banks tightened their credit standards drastically in response to the elevated rates and weakening household balance sheets in a declining economy to safeguard their asset quality.
People also spent less last year on things for which they mostly used their credit cards such as consumer durables, clothes, travel, leisure and recreational activities.
Card spend is a distant barometer for the health of consumer spending and cannot draw close conclusions due to sharply low card penetration in Sri Lanka.
For instance, Sri Lanka still has 1,952,992 cards in active mode compared to a roughly 8.5 million workforce.
In December, banks issued just 1,174 new cards and 25,796 cards for the full year.
As inflation eases and economic conditions improve relative to the upheaval seen last year, there could be some uptick in card spend this year compared to 2022.
Card use hit a wall when the rates on cards were raised to the restrictive level of 36 percent within months, doubling from where it was.