New credit card guidelines will not affect banks’ bottom lines

Any reduction in spending arising from the new measures on credit cards, is unlikely to dampen the overall net interest income of banks, says OSK Research. It also said this is despite credits cards having higher yields.

In a research note today, OSK Research said the total credit cards debts in the banking system are still marginal at 3.4 per cent of the total loans base.

The research firm has maintained an overweight call on the banking sector despite the new guidelines.

Bank Negara Malaysia (BNM) has revised the minimum income requirement to apply for a credit card to RM24,000 from RM18,000 previously with immediate effect. For applicants or cardholders who earn RM36,000 per annum or less, they can only hold credit cards from a maximum of two issuers.

The maximum credit limit extended to a cardholder shall also not exceed twice their monthly income per issuer.

Meanwhile, the Association of Islamic Bank in Malaysia (AIBIM) has welcomed the new guidelines on credit cards. The association said although the income eligibility for issuance of credit cards has increased, consumers below the threshold, have the option to use debi tcard facilities which are more tailored towards an individual’s cash balance and more widely used by Islamic banking.

“These are prudent measures as Islamic banking always propagates care in credit consumption by consumers,” its president, Datuk Mohd Redza Shah said.

The association also welcomed the credit card security features enhancement set by Bank Negara, which in the longer term will reduce fraud.