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Domestic banks are expanding their corporate credit card businesses to take advantage of executives’ higher spending compared to retail customers.

This year, PT Bank Danamon, PT Bank Mega and PT Bank CIMB Niaga have announced that they are issuing new cards or relaunching existing products to tap corporate executives as lenders expect the economic recovery to spur business spending.

“In average spending, corporate clients sometimes require more than 20 times the usual credit limit of retail customers because they have to travel, lobby and entertain their clients.

“The business has a lot of potential as the economic situation gets more positive this year,” Darwin, head of Bank Danamon’s premium and corporate division, said last week.

On Thursday, Bank Danamon launched a gold corporate card for top executives. Darwin said the lender had issued 10,000 corporate credit cards and expected to add an additional 2,100 customers this year, increasing total transaction value to Rp 4 trillion ($432 million) from Rp 3 trillion in 2009. Danamon says it holds 20 percent of the nation’s credit card market.

Darwin said the convenience factor was a key driver for the business because some executives were still using personal credit cards to cover their corporate expenses.

“Such products will eliminate the fuss of conventional reimbursement methods and also make it easier for the company to control executives’ spending because the company sets the limit and will get the full report on spending,” Darwin added.

He explained that the corporate credit card business operated differently from retail, with banks relying on fee-based income from merchants instead of interest generated from cardholder spending.

Kostaman Thayib, director of Bank Mega, said it expected the launch of its first corporate credit card in January to boost its credit card transactions to Rp 6 trillion this year from Rp 4.7 trillion in 2009.

Kostaman added that a key advantage of issuing corporate cards was that risk was easier to assess compared to retail clients.

“Companies have clearer financial statements than individuals, thus it is easier to measure the risk and we will not be expecting bad loans from corporate cards,” Kostaman said.

Non-performing loans are a major problem in the credit card sector, with the Indonesia Credit Card Association saying that the average NPL ratio was around 9 percent last year, compared with 3.31 percent across the broader banking sector.