PETALING JAYA: The lowering of the credit card interest rates and late payment fees effective March 31 has alerted banks to scrutinise consumer profiles more closely to boost spending amid the prevailing weak economy.

Although the rates reduction is small, the move is expected to encourage spending on cards and, at the same time, not neglecting the surveillance on prompt payment and the risk of over-spending.

Banks are studying consumer behavioural patterns to have a better understanding on what types of credit or other offerings they should put on the table to boost spending.

OSK Research said although the reduction in the credit card interest rates was unlikely to affect banks’ interest income, nonetheless it might encourage consumption credit patterns via the use of the cards.

A banking analyst said banks would have to be customer-centric as credit card income was a potential revenue earner for banks.

Hong Leong Bank Bhd (HLB) chief operating officer, personal financial services, Moey Tan said as the card business was one of the key consumer businesses for the bank, it would continue to invest in this segment to build scale and critical mass.

“HLB has a significant loan and customer base. Our competitive advantage is our use of customer analytics. We adopt a customer-centric approach to understand customers’ needs, desires and consumption behaviour,” Tan said.

“Our sophisticated consumer analytics have enabled us to further entrench ourselves in the community and build lasting relationships with our customers while acquiring new ones.”

The bank would look into developing more relevant products and services and also leverage on its vast distribution channels, including its 185 branch networks, to promote the sale of credit cards, Tan said.

HLB, according to ECM Libra, had the largest exposure to the credit card segment among local banks at 5.8% of total loans outstanding.

Last Friday, the Association of Banks in Malaysia announced that interest rates on outstanding credit card balances would be reduced by between 0.5% and 1.5%, while late payment fees would be slashed to a minimum of RM5 and a maximum of RM75 effective March 31.

RHB Bank’s head of consumer product management Angela Tan said the bank would continue to differentiate its products to suit customers’ lifestyle as they had different preferences.

She said as consumer spending was now focused on daily necessities, the bank would respond to address this concern.

RHB recently launched the Tesco-RHB Credit and Debit card that allows customers to earn “Tesco-RHB” points on all spending which can be converted into cash vouchers for use at any Tesco hypermarket outlets.

RHB has about 8% market share in cards circulation and 7% market share in terms of receivables.