China Merchants Bank and China CITIC Bank are developing their credit card businesses to stimulate retail income.
August 11, 2016 | Research- China's credit card sector is becoming a profitable source to stimulate the bank's retail income
- China Merchant Bank has seen a shift in retail loans originated by credit cards
- China CITIC Bank has embraced big data to enhancing its marketing and branding capabilities
China experienced its slowest growth in 2015, raising genuine concerns about its impact on the local economy as well as on international financial markets. One concern was the debt-to-gross-domestic product ratio which reached 249% by the end of September 2015 compared to only 164% in 2008 according to BIS data. Meanwhile, the debt ratio in the Eurozone was 270% and 248% in the US, intensifying concerns about China’s debt ratio approaching danger levels. Strictly speaking, what matters is the risk of widespread corporate defaults in China provided defaults of other debts are relatively low. To confront a changing external environment, banks in China have adopted lower interest rate policies and therefore faced pressure on interest income. The near completion of interest rate liberalisation, a decline in shadow banking, and weak loan demand have all contributed to difficult market conditions for commercial banks in 2015. One solution to this problem is to strengthen retail banking models to relieve the dependence on interest income and open up non interest businesses.
As the expansion of household debt was a key factor in the sub -prime crisis for the United States, there is public concern in China as to whether household debt, an indispensable component of retail lending profits, will increase threats to the banking industry and Chinese economy. However, household debts constitute a lower portion of the GDP ratio beca...
Categories:
Cards, China, Consumer Finance, Credit Cards, Retail BankingKeywords:China, CMB, China Citic Bank, AUM, NPL, Retail Bank, Retail Loans, Credit Card, Mortgage
