BBVA Mexico says in control of credit card defaults

[Joanne98]

MEXICO CITY, Feb 9 (Reuters) - Spanish bank BBVA's Mexican unit expects to keep defaults on its credit card debt from rising this year, executives said on Monday, despite an expected recession and mounting job layoffs.

BBVA (BBVA.MC: Quote, Profile, Research) is offering to slash credit card interest rates for clients that make their monthly payments on time, a deal meant to help Mexicans reduce their debt as the economy worsens this year, consumer credit director Rodrigo Manrique told reporters.

Mexico's leading bank, BBVA expects to hold nonperforming debt in its credit card portfolio at its current level of 8.2 percent through the year, spokesman Jorge Terrazas said.

Lending to consumers and businesses in Mexico expanded at explosive rates of around 50 percent a year in 2005 and 2006 as banks tended to a market starved of financial services after an economic crisis in the mid-1990s brought the industry to its knees.

But in recent months, banks have become more cautious about handing out new credit cards and giving loans to consumers as those sectors are increasingly hurt by defaults.

Cutting customers' credit card interest rates to 28 percent, compared to an industry average of 42 percent, means less profit per card but is worthwhile to keep clients healthy, Manrique said.

http://uk.reuters.com/article/marketsNewsUS/idUKN0945058020090209

Only 28%.. Wow. What a deal!