Related News
China sees 6.7% rise in credit card defaults
By Zhang Fengming |
May 19, 2011, Thursday
|
Online Edition
Online Edition
CREDIT card defaults in China increased in the first quarter on rising popularity of the plastic, the central bank said today.
The value of outstanding defaults of more than six months rose 6.7 percent from the fourth quarter of 2010 to 8.2 billion yuan (US$1.3 billion) in the first quarter of this year, the People's Bank of China said on its Website.
Defaults accounted for 1.7 percent of the total outstanding loans on credit cards, the central bank said.
Though rising, the default risk is still within control, said a market watcher who declined to be named.
In general, a default rate of 4.5 percent is acceptable in the United States, the birthplace of credit cards. In the worst time of the global financial crisis, default rate in the US has increased to about 10 percent.
China is encouraging the use of bank cards to drive up domestic consumption with a safer payment vehicle. Lenders are expanding credit card business as a new cash cow. Smaller banks including China Merchants Bank and China Guangfa Bank have taken the card business as their competitive edge as they cannot compare with the huge network of China's big-five banks.
China has issued more than 242 million credit cards at the end of March, up 25.7 percent from a year ago, with 2.6 billion bank cards in circulation at the end of March, up 18 percent from a year ago.
Credit cards are expected to be the second most lucrative retail credit business for lenders by 2013, following individual mortgages, said McKinsey & Co in an earlier report.
Regulators are keeping a firm eye on the growth of credit cards after receiving consumer complaints that some banks issue cards indiscreetly without prudent checks in a rush to get more market share.
The value of outstanding defaults of more than six months rose 6.7 percent from the fourth quarter of 2010 to 8.2 billion yuan (US$1.3 billion) in the first quarter of this year, the People's Bank of China said on its Website.
Defaults accounted for 1.7 percent of the total outstanding loans on credit cards, the central bank said.
Though rising, the default risk is still within control, said a market watcher who declined to be named.
In general, a default rate of 4.5 percent is acceptable in the United States, the birthplace of credit cards. In the worst time of the global financial crisis, default rate in the US has increased to about 10 percent.
China is encouraging the use of bank cards to drive up domestic consumption with a safer payment vehicle. Lenders are expanding credit card business as a new cash cow. Smaller banks including China Merchants Bank and China Guangfa Bank have taken the card business as their competitive edge as they cannot compare with the huge network of China's big-five banks.
China has issued more than 242 million credit cards at the end of March, up 25.7 percent from a year ago, with 2.6 billion bank cards in circulation at the end of March, up 18 percent from a year ago.
Credit cards are expected to be the second most lucrative retail credit business for lenders by 2013, following individual mortgages, said McKinsey & Co in an earlier report.
Regulators are keeping a firm eye on the growth of credit cards after receiving consumer complaints that some banks issue cards indiscreetly without prudent checks in a rush to get more market share.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
