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July 14, 2024

EastWest Bank takes P2.6B hit due to ceiling on credit card charges

East West Banking Corp. led by bankero Tony Moncupa took a P2.6 billion hit last year due to the ceiling imposed by the Bangko Sentral ng Pilipinas (BSP) on all credit card charges.

“Our bank was also adversely affected by the regulation that put a cap on card interest rates. This meant for us a P2.6 billion reduction in gross interest income and largely accounted for about 50 percent of the total decline in net interest income,” the bankero told the bank’s stockholders during their annual meeting.

Moncupa said the listed bank has been adversely affected by the regulation on the cap on credit card interest rates.

In November 2020, the BSP imposed a two percent per month and 24 percent per year interest rate or finance charge cap on unpaid credit card balance through Circular No. 1098 approved by the Monetary Board.

Under the circular, the monthly add-on rates that credit card issuers could charge on installment loans was also limited at a maximum rate of one percent as well as the maximum P200 per transaction processing fee on the availment of credit card cash advances.

The credit card receivables of the Gotianun-led bank slipped by 5.7 percent to P33 billion last year from P35 billion in 2020.