State Banks Report Drop in Credit Card Balances Spending

As reported by financial analysts and the latest data from China’s A-share listed state-owned banks, there has been a notable decline in credit card loan balances and consumer spending. This observation is based on the banks’ half-yearly reports, revealing a downturn in credit card business performance for the first half of 2024.

Key Findings from Major Banks’ Half-Year Reports:

Industrial and Commercial Bank of China (ICBC): The bank reported a decrease in credit card issuance, with 1.52 billion cards issued at the end of June, compared to 1.53 billion at the end of 2023. The credit card loan balance stood at 7120.49 billion yuan, a slight increase from 6897.31 billion yuan in 2023. The bank’s consumer spending for the period was 1.06 trillion yuan, a slight decrease from the 1.09 trillion yuan spent in the same period last year.
Agricultural Bank of China: The bank saw an increase in credit card loan balance, reaching 7732.14 billion yuan, up from 7000.31 billion yuan in 2023. Its consumer spending for the period was 1.113 trillion yuan, showing a 3.3% growth compared to the previous year, which is one of the few cases where a state-owned bank reported growth in this area.
Bank of China: With a credit card loan balance of 5828.52 billion yuan at the end of June, an increase of 5.71% compared to the previous year, the bank’s consumer spending for the period was 6485.76 billion yuan, a decrease of approximately 400 billion yuan from the same period last year.
China Construction Bank: The bank reported 1.31 billion credit cards issued and 1 trillion yuan in credit card loan balances, a slight increase from the previous year. However, the total consumer spending for the period was 1.38 trillion yuan, down from 1.43 trillion yuan in the previous year.
China Communications Bank: The bank witnessed a decrease in credit card issuance, with 6488.83 million cards in circulation at the end of the reporting period, down from 7132.42 million cards at the end of the previous year. The loan balance increased by 65.64 billion yuan, a 1.34% increase, while the total consumer spending for the period was approximately 1.24 trillion yuan, a decrease from the 1.43 trillion yuan spent in the previous year.
Postal Savings Bank: The bank saw a significant reduction in credit card issuance, with 3957.68 million cards in circulation, a decrease from 4369.98 million cards at the end of the previous year. The loan balance decreased by nearly 40 billion yuan, while consumer spending for the period was 5031.14 billion yuan, a decrease from 5669.46 billion yuan in the previous year.

Analysis and Implications:

These findings suggest that the state-owned banks in China are experiencing a downturn in their credit card business, which could be attributed to several factors. The primary reason might be the overall sluggishness of the consumption market, as mentioned in the reports. Another possible factor is the banks’ strategic shift towards improving the quality and structure of their customer base, as indicated by the Agricultural Bank’s focus on penetrating key segments and enhancing the management of credit card clients.

Furthermore, the banks are also prioritizing the optimization of risk management strategies and the enhancement of their risk asset structures, as exemplified by the Postal Savings Bank’s emphasis on building a quantified risk control system and refining risk management approaches.

The downturn in credit card loan balances and consumer spending also highlights the challenges and pressures that the retail credit and credit card sectors face in terms of risk management. This observation underscores the need for banks to maintain a high level of caution and respect for the risks associated with these operations.

Industry Response and Future Outlook

In response to these challenges, financial institutions are likely to adopt more stringent risk assessment methods, diversify their customer base, and enhance their digital capabilities to improve the efficiency and effectiveness of their credit card operations. This could involve leveraging advanced analytics, artificial intelligence, and other technological tools to better understand consumer behavior and manage credit risks.

The future outlook for China’s credit card market might see a continued focus on innovation and technology integration to drive growth and maintain customer engagement. Banks will need to balance their efforts to maintain a strong risk management framework with the pursuit of new business opportunities, aiming to stabilize and potentially revitalize their credit card businesses in the face of current market conditions.