Mashreq, the largest issuer of credit cards in the UAE, expects that card debt defaults will decrease by up to 40 per cent in 2010, but this will not mean a spike in revenue, said a senior official.
"There will be an improvement of 30-40 per cent, provided there is no more bad news on government debt," Vimal Kumar, Head of Cards Business at Mashreq, told Emirates Business.
If the economy stays on track, then 2010 will be "definitely" better than the past year, he said.
He said Mashreq's card NPL rates seemed high because it opted for the international practice of writing off a card debt after 150 to 180 days of non-payment of instalments, whereas many banks follow the UAE Central Bank's cut-off, writing off a bad loan only after 360 days.
Under the bank's policy, retail loans, with the exception of personal loans to UAE nationals and small to medium-size enterprises (SME) auto loans, are charged off when installments are due for more than 150 days.
Personal loans to UAE nationals and SME auto loans are charged off if installments are due for more than 180 days.