Explosion in popularity of credit cards in the Middle East
The total number of credit cards in the Middle East and North Africa (MENA) region jumped by 24 percent in 2006 to 6.23 million, according to new research from Lafferty Group, a UK-based retail banking and cards research house.
Lafferty Group forecasts that the number of credit cards in circulation will rise by a further 51 percent by 2008, dwarfing growth in most other regions of the world. Of the 12 markets analysed by Lafferty Group, Jordan saw the highest growth, with credit card numbers jumping by 61 percent to almost 275,000. Tunisia had the second highest growth, up 55 percent to 55,000.
“We are witnessing incredible growth in the region, albeit from a low base,” comments Alison Smithie, manager of Lafferty’s World Cards Intelligence database. “This is the first study to comprehensively reveal the explosion in the popularity of credit cards in the region, which in 2006 saw some of the highest levels of growth in credit card numbers worldwide.”
The credit cards industry is very profitable to banks in the MENA region. Lafferty Group calculates that the total pre-tax profit of the credit card industry in the region was $300 million in 2006. It estimates that this figure will grow by 22 percent between 2006 and 2008.
Ms Smithie says that countries within the Gulf Cooperation Council (GCC) are the most attractive to credit card issuers, because of the wealth of their inhabitants and their propensity to spend on credit cards. “The region is currently experiencing an explosion in wealth and consumers are increasingly spending this wealth through their credit cards – the five GCC markets alone generated $235 million in pre-tax profits last year.”
She adds that countries in North Africa and the Levant region are less profitable, but still highly attractive with strong long-term growth potential. According to Lafferty Group’s analysis, Saudi Arabia is the most profitable market in the region, both in terms of overall profitability and profit per card, at $107 million and $95, respectively. At the other end of the scale was Morocco in terms of overall profits, at $4 million, and Egypt in terms of profit per card, at $20.