Local credit and cash card issuers are weighing measures to cancel preferential benefits to cardholders or incur new fees in the face of possible legislative changes that would cap interest rates on revolving credit.
“It is certain that our bank will have to adjust the benefits we offer to cardholders now that profits will be negatively impacted,” a vice president at Taipei Fubon Bank’s (台北富邦銀行) credit card division said yesterday on the condition of anonymity.
“Many have mistaken us [card issuers] for loan sharks, but we are not and the profit is not as rosy as one might think,” the vice president said.
In February, credit card issuers reported an aggregate income of NT$2.7 billion (US$79 million) from a total revolving balance of NT$247.7 billion, the Financial Supervisory Commission’s latest statistics showed.
The Taipei Fubon official said no concrete measures had been finalized, but the adjustment would be based on how often cardholders use their cards, which represents their contribution to the bank’s earnings. The bank may consider tightening credit if risky cardholders apply for unsecured loans, the official added.
After two loss-making years, card issuers in Taiwan have already begun to cancel free annual membership, bonuses, parking benefits or free rides to the airport for inactive cardholders.
If the amendment to the Civil Code (民法) passes the third reading next week, it will place a cap on interest rates on cardholders’ late payments to 12.5 percent, down from the current 20 percent.
Citibank Taiwan, the nation’s second-largest card issuer with 1.5 million active cardholders, had the largest share of NT$492 million in revolving interest income in Feburary, while Chinatrust Commercial Bank (中國信託商銀), the nation’s largest card issuer with 3.5 million active cardholders, had the second-largest share of NT$251 million.
Representatives of both banks reportedly met on Thursday to discuss contingency plans if the rate cut takes effect, but none were available for comment yesterday.
Although banks will be less aggressive in offering benefits to attract new cardholders, Chan Ying-bor (詹英柏), executive vice president of Union Bank of Taiwan (聯邦銀行), yesterday said the bank would also be prudent in canceling credit card benefits.
“We can’t continue any loss-incurring businesses anymore. But we won’t necessarily cut everything since benefits are still incentives to attract card use,” he said, adding that the bank would fully evaluate market reaction before making changes.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS