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in the first half of this year, the credit card business of listed banks is still facing the dilemma of shrinking scale and increasing non-performing pressure.

recently, a reporter from securities china sorted out the credit card business data disclosed in the 2024 semi-annual reports of major listed banks and found the following three characteristics: first, the card issuance volume or customer scale of some large state-owned banks and joint-stock banks continued to decrease in the first half of the year; second, the credit card transaction amount of the vast majority of large and medium-sized banks has further expanded; third, the non-performing loan rate of credit cards is generally facing pressure, reflecting that customer overdue situations are still increasing.

in recent years, credit card consumption has been declining. with stricter supervision of bank credit card business, listed banks are paying more and more attention to the optimization of credit card business and risk prevention and control. at the semi-annual performance conference, senior executives of several listed banks including china merchants bank, ping an bank and industrial bank responded to the latest credit card business optimization strategy to cope with multiple pressures such as poor performance of intermediate income and declining asset quality.

1

the total number of credit cards of many major banks continues to decrease

with the official and comprehensive implementation of the "new credit card regulations" in july this year, commercial banks have gradually shifted from simply pursuing single assessment indicators such as the number of cards issued, customer scale and market share, to pursuing higher-quality customer base, better retail loan structure, and more precise risk control measures.

as the credit card business bids farewell to the era of rapid growth of "land grabbing" and enters the era of "intensive cultivation" of existing assets, a notable feature is that commercial banks have significantly cooled down the pace and number of credit card issuance, and even actively cleared out some "long-dormant cards."

the obvious impact of this is that the total amount of bank credit cards has been compressed, and its total scale has shown a downward inflection point since the fourth quarter of 2022, and has been decreasing for at least six consecutive quarters to date.

according to data from the central bank, in the first quarter of this year, there were 760 million credit cards and combined credit and debit cards nationwide, a further decrease of about 7 million from the end of last year. in 2023, the overall decline in this indicator is 31 million, a year-on-year decrease of about 3.89%.

credit card business data from the 2024 semi-annual reports of listed banks compiled by securities china reporters showed that the number of credit cards issued by many large and medium-sized banks that rank at the top in terms of the number of credit cards has dropped significantly. this trend is more reflected in some of the large banks that rank at the top in terms of card volume.

the financial reports of industrial and commercial bank of china and china construction bank show that as of the end of june this year, the total number of credit cards of icbc and ccb was 152 million and 131 million respectively, which was about 1 million less than the beginning of the year for both banks, and the number of credit card customers of ccb also decreased by about 1 million. bank of communications and postal savings bank, which are also large state-owned banks, have seen a significant decrease in the number of credit cards during the year. as of the end of june this year, the total number of credit cards of bank of communications was 64.8883 million, which was nearly 6.436 million less than the beginning of this year; and the total number of cards of postal savings bank was 39.577 million, which was about 2.823 million less than the beginning of the year.

joint-stock banks were also not to be outdone. ping an bank saw the number of its credit card customers decrease by 2.333 million at the end of june compared with the beginning of the year. the number of credit cards issued by pudong development bank and china merchants bank decreased by 1.92 million and 450,000 respectively compared with the beginning of the year. among them, the number of china merchants bank customers decreased by about 388,000, and the rate of decline slowed down compared with last year.

it is worth mentioning that the number of credit cards issued by some "big credit card holders" in the first half of this year not only did not decline, but continued to grow rapidly. for example, the number of new cards issued by china citic bank in the first half of the year was about 4.11 million, while the number of new cards issued by bank of china and industrial bank were about 2.07 million and 1.15 million respectively. hua xia bank also added a net of 1.36 million credit cards in the first half of the year.

in addition, the growth rate of city commercial banks with a relatively small base in the first half of the year was significantly higher than that of other large state-owned banks and joint-stock banks. for example, the growth rates of nanjing bank, jiangsu bank and shengjing bank were 10.19%, 9.36% and 6.03% respectively.

in fact, "fine management" has become a keyword that major banks have repeatedly mentioned in their financial reports. under the strict supervision of the new credit card regulations, strengthening the dynamic monitoring and management of dormant credit cards and strictly controlling their proportion have become one of the key points of supervision. the so-called dormant cards are credit cards that have no active transactions for more than 18 consecutive months and whose current overdraft balance and overpayment are zero.

after gradually disposing of dormant cards, the active card rate of credit cards has been improved to a certain extent. the "china bank card industry development blue book (2023)" released by the china banking association in september 2023 shows that the cumulative number of active credit cards at the end of 2022 was 650 million, an increase of 1.1% year-on-year, and the active card rate was 56.9%, an increase of 1.9 percentage points from the previous year.

2

the total amount of credit card transactions is shrinking at an accelerated rate

in addition to the sluggish growth in the number of cards, another important trend in the credit card business is that the total transaction amount of customers using credit cards is also continuing to decrease.

china securities journal reporters sorted out 15 listed banks with the largest credit card transaction amounts. among them, 14 of them saw a year-on-year decline in this indicator, and 8 of them saw a decline of more than 10%. only the agricultural bank of china saw a year-on-year increase in transaction amount, with an increase of 3.3%. the total credit card transaction amount of many joint-stock banks fell by more than 15% year-on-year, and even fell by more than 20%, which was a certain increase compared with last year.

overall, according to incomplete statistics from securities china reporters, the total transaction amount data showed a decline in 14 banks, and the total credit card transaction amount decreased by a total of about 1.86 trillion yuan in the first half of the year; among them, the five large state-owned banks decreased by a total of about 380 billion yuan, and the seven joint-stock banks decreased by a total of about 1.47 trillion yuan.

looking at the four joint-stock banks with year-on-year declines of more than 15%, ping an bank decreased by about 353.2 billion yuan (-22.9%), everbright bank decreased by about 348.8 billion yuan (-28.0%), industrial bank decreased by about 218.7 billion yuan (-18.2%), and shanghai pudong development bank decreased by about 200.6 billion yuan (-17.2%). in addition, china merchants bank, citic bank and hua xia bank decreased by about 162.2 billion yuan, 114.5 billion yuan and 70.4 billion yuan respectively.

in addition, among the banks ranked at the top in terms of transaction amount, the total credit card transaction amount of china merchants bank in the first half of the year was 2.21 trillion yuan, a year-on-year decrease of 6.8%; china construction bank was 1.38 trillion yuan, a year-on-year decrease of 3.5%; bank of communications was 1.24 trillion yuan, a year-on-year decrease of about 196.6 billion yuan; the transaction amounts of citic bank and ping an bank were 1.24 trillion yuan and 1.19 trillion yuan respectively.

different from the general shrinkage in total transaction amounts, the changes in credit card loan balances of some major banks showed obvious differentiation: the loan balances of large state-owned banks continued to grow generally, some joint-stock banks experienced a large decline in the first half of the year, and the credit card loan balances of some city commercial banks grew rapidly.

the data of 20 banks compiled by securities china reporters include large state-owned banks, some joint-stock banks and representative city commercial banks.

data shows that among the top five banks in terms of credit card loan balance, four are state-owned banks, all of which have achieved growth, with only china merchants bank experiencing a decline in the first half of the year. among them, ccb became the first bank to exceed 1 trillion yuan in credit card loan balance, with a slight increase in the first half of the year; while abc grew faster in the first half of the year, with an increase of about 73.2 billion yuan, while icbc and boc grew by 3.2% and 5.4% respectively. among the banks with relatively low bases, bank of beijing and nanjing bank grew faster, with increases of 18.8% and 16.2% respectively.

banks with more significant declines include china everbright bank, down about 11.3%, shanghai bank, down about 9.2%, ping an bank and industrial bank, down about 8.4% and 8.2% respectively.

as one of the representative businesses of retail finance, credit card business is closely related to customer consumption. the shrinking balance of bank credit card loans objectively reflects the impact on macro-consumption demand. it is worth noting that in the first half of this year, consumption data in my country's first-tier cities showed signs of decline.

specifically, data released by local statistical departments show that the total retail sales of consumer goods in shanghai and beijing in the first half of the year were 916.571 billion yuan and 698.24 billion yuan, down 2.3% and 0.3% year-on-year respectively; guangzhou's total retail sales were 560.155 billion yuan, the same as the same period last year; and shenzhen's data increased by 1% year-on-year to 507.203 billion yuan. if we only look at the performance in june, shanghai, beijing, guangzhou and shenzhen fell by 9.4%, 6.3%, 9.3% and 2.2% respectively.

in the central bank's balance sheet, several calibers of data can intuitively show that residents' willingness and measures to increase leverage have not been rekindled since the beginning of this year. in the central bank's deposit-taking company overview, household deposits rose from 139.52 trillion yuan at the end of january this year to 145.93 trillion yuan at the end of july.

in addition, data from the central bank's financial institutions' rmb credit receipts and payments statement showed that short-term consumer loans under household loans fell from 10.4 trillion yuan at the end of january this year to 9.9 trillion yuan at the end of july; medium- and long-term consumer loans fell from 47.91 trillion yuan to 47.77 trillion yuan at the end of july.

3

credit card loan quality pressure increases

china securities journal reporters counted 12 banks that disclosed the asset quality of their credit card businesses. among them, the non-performing loan rate of credit card loans of 9 banks increased, while the non-performing loan rate of credit card loans of 8 banks exceeded 2%.

specifically, as of the end of june this year, as banks with a cumulative credit card issuance of more than 100 million cards, the non-performing loan ratio of icbc, ccb and citic bank's credit cards has increased compared with the beginning of the year. among them, the non-performing loan ratios of icbc and ccb's credit cards are 3.03% and 1.86%, respectively, up 0.58 percentage points and 0.2 percentage points from the beginning of the year; the non-performing loan ratio of citic bank's credit cards is 2.57%, up 0.04 percentage points from the beginning of the year.

in addition, the credit card non-performing loan ratios of bank of communications, shanghai bank and minsheng bank also increased significantly compared with the beginning of the year, up 0.4, 0.38 and 0.26 percentage points respectively. in terms of the absolute value of the non-performing loan ratio, although the non-performing loan ratio of industrial bank's credit cards decreased by 0.05 percentage points compared with the beginning of the year, the bank still ranked first among major banks in this indicator, reaching 3.88%. in addition, the non-performing rates of minsheng, ping an and citic reached 3.24%, 2.7% and 2.57% respectively.

if we look at the national banking credit card business, data disclosed by the central bank at the end of june this year showed that as of the end of march 2024, the total amount of credit card loans overdue for half a year had reached 109.676 billion yuan, an increase of 11.541 billion yuan from the beginning of the year, an increase of 11.76%, close to the level of the whole year last year, accounting for 1.29% of the total payable credit balance of credit cards, an increase of 0.26 percentage points from the beginning of the year.

industry analysts said that the increase in credit card delinquency is related to the fact that some banks previously lowered their review standards, issued a large number of cards for marketing, and blindly used the number of cards issued as a performance requirement. on the one hand, banks stimulated card consumption and increased the interest rate generated by loans through various promotional activities such as installments; on the other hand, they did not properly publicize the serious impact of overdue risks on consumers from the perspective of credit safety.

according to data disclosed by the china banking and insurance regulatory commission, the transfer volume of bulk personal business non-performing loans in my country in the first half of 2024 was 32.15 billion yuan, of which credit card overdraft loans were about 9.86 billion yuan, accounting for about 30.7%. since the beginning of this year, many joint-stock banks including minsheng bank, bank of communications, shanghai pudong development bank, everbright bank and china merchants bank have listed the transfer of personal non-performing loans of credit card overdrafts at the china banking and insurance regulatory commission.

recently, senior executives of several listed banks responded to the issue of credit card loan asset quality at performance conferences. among them, senior executives of industrial bank said that the bank has orderly promoted risk management and transformation development to curb the rising trend of non-performing loans. the bank's new non-performing amount has fallen to 75% of the same period last year, and the trend of non-performing exposure has obviously slowed down.

in explaining the reasons for the decline in the quality of the bank's credit card loans, the management of china merchants bank said that on the one hand, the weak economic recovery affected consumers' repayment ability; on the other hand, china merchants bank strictly managed risks and carefully classified the assets of some customers and identified the overdue stage, which led to the increase in the scale of the concerned and overdue loans. the relevant person in charge of the bank said that if there are no major changes, it is expected that by the end of this year, the credit card non-performing rate may be basically the same as last year.

4

banks optimize and adjust their business strategies

credit card competition has entered a red ocean era, and banks have begun to adjust their business strategies, no longer simply expanding user base and credit balances as their strategic goals. operating pressure on bank credit card businesses has gradually emerged.

how to increase the promotion of credit cards and service innovation, how to gain massive attention in consumption scenarios, increase credit card transaction volume, and maintain excellent asset quality have become the main directions for banks to work hard.

at a recent performance briefing for listed banks, some bank executives also revealed the latest operating strategies for the credit card business.

the management of industrial bank stated that the bank has implemented a "control new and reduce losses" strategy for credit cards. first, the quality of the customer base of new card issuance has been significantly improved, and the proportion of young educated customers and low-risk customers has increased compared with the beginning of the year. second, the loan control strategy has been continuously optimized, and a multi-dimensional customer risk label has been constructed to optimize the loan control strategy and clear high-risk customers in a timely manner. third, the centralized electric collection team has been expanded, a self-collection management team that matches the asset scale has been established, and an independent collection system has been established. fourth, a mechanism for agile iteration of risk models has been established to accelerate the construction and iteration of core risk control models.

at the performance release conference, the management of citic bank stated that in terms of credit cards, the bank has continued to optimize customer access since 2019, reduce high-risk customers such as joint debt, deepen asset structure adjustments, and continue to increase the proportion of high-quality customers. at the same time, it also pays attention to the offline "food, accommodation, transportation, entertainment, shopping" innovative scene transformation, and the proportion of traditional customer acquisition has dropped to less than 20%. the bank has also strengthened its in-depth cooperation with leading internet platforms, using joint modeling to screen high-quality customer groups and achieve precision marketing. in the first half of the year, the number of customers for leading internet co-branded cards increased by 96% year-on-year.

judging from the semi-annual reports of listed banks disclosed recently, banks are actively promoting the construction of credit card usage ecosystem and smart scenarios in deepening credit card customer management and enriching credit card product systems, introducing concepts or benefits such as technology, cute pets, tea and coffee, videos, sports and fitness, etc. to meet the diverse needs of young customers.

it is worth mentioning that some national banks have implemented unified management of customer credit cards and consumer loan credit limits, opened up synergies between credit card business and other retail business lines, and tapped the potential value of existing customers through intra-line and cross-line customer conversions.