ARGENTINA: BANKS POISED FOR CREDIT CARD BOOM?
More than half of Argentina’s population is categorized as middle and high income, plenty of people in Argentina have “plastic” and stores are ready to take it, Morgan Stanley analysts note. Yet in Argentina, credit card spending to personal consumption expenditures is 13%, in line with Mexico and less than half that of Brazil.
Morgan Stanley Jorge Kuri, Jorge Echevarria and Felipe G. Salomao think credit card spending could double in Argentina over the next five years. They count 156 companies that issue roughly 90 card brands. They write:
“Our credit card model suggests that card spending can reach 29% of personal consumption expenditures (PCE) in 2021, up from 13% today. This implies a very attractive 5-year compound annual growth rate (CAGR) in transaction volumes of 34% in nominal terms and 22% in real terms. A key driver of our bullish view on card usage is that plastics and point-of-service (POS) terminals are already in place, in vast numbers. So usage penetration will depend more on increasing card spending, rather than on the long and expensive process of issuing plastics and acquiring new merchants".
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