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Credit card loans up by 19 per cent

MAS keeping tabs, but‘no serious cause forconcern’ yet: Tharman

ESTHER FUNG

esther@mediacorp.com.sg

WITH debt accumulated by individuals rising steadily, the Monetary Authority of Singapore (MAS) will be keeping a close eye on personal credit lines.

In September, credit card loans amounted to $844 million more than in the same month a year ago — a 19 per cent increase.

Said Finance Minister Tharman Shanmugaratnam: “An 18- to 19-per-cent growth in credit cards, even if in line with past economic growth, is something which should be watched carefully.”

The MAS is monitoring but, “as of now, there is no serious cause for concern, and we’ll stay in close touch with the banks”.

He also noted: “The amounts rolled over for more than a month have actually remained constant at about 15 per cent, and the charge-off rates, which are bad loans, have remained relatively constant at 3 to 4 per cent.”

Mr Seah Kian Peng, MP for MarineParade GRC, asked if MAS would review the eligibility criteria for personal credit lines. Mr Shanmugaratnam said the current rules were “not too loose and in fact, stricter than in most countries”.

Total consumer loans — including secured credit such as housing loans, car loans and share financing — grew by10 per cent year-on-year. Two-thirds of the increase was due to a growth in housing loans, a reflection of the buoyant property market in 2006 and last year.

The increase “has been in line with economic growth and the upturn in property purchases in recent years” and is “not in itself a cause for concern”, said Mr Shanmugaratnam.

“We would, of course, be concerned if financial institutions are lending without regard to credit standards and risks assessment, and if borrowers are taking credit without considering if they can afford it,” he added, but the lending criteria employed by financial institutions and required by MAS address such concerns.

“MAS will continue to watch this of course ... and if necessary, discuss the matter with financial institutions.”