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23/09/2009 -
The Canadian credit card industry is poised to improve and perhaps return to growth in the coming months, according to an announcement Tuesday by Canadian Imperial Bank of Commerce CIO Gerry McCaughey.In a webcast investor conference in Montreal, McCaughey said that if the economy performs "reasonably" and the unemployment rate peaks and then declines as expected, credit card losses could subside in the next couple months and the industry could return to growth by next year.
"The impact on the industry from a viewpoint of increased profitability due to lower loan losses would be significant," he said.
In the third quarter of 2009, CIBC dedicated $547 million to bad loans, marking a significant increase over the $203 million seen in the third quarter of 2008.
As the largest issuer of credit cards in the country and the fifth-largest bank overall, CIBC's optimism is considered a good sign for economic recovery.
If CIBC's predictions are accurate and credit card losses start to subside, consumers will likely feel more confident about spending with their credit cards, and banks will be encouraged to ease up their credit card lending restrictions.
Both of these events will further the growth of the credit card industry, making credit card and other payment card processing an essential asset for merchants.
