Citibank slowdown in plastic spending

Citibank saw growth in credit card spending in Hong Kong slow in the second quarter, with retail sales in April and May rising about 20 per cent year on year, down from 32 per cent in the first quarter.

Although analysts have warned of a second-quarter retail slowdown because of weakening domestic spending and slowing growth in spending by mainland tourists, the bank's director of cards and unsecured lending, Maggie Ng Leung Yuk-yee, said she was still optimistic about the short-term outlook.

'Consumer spending and repayment ability are still strong. We haven't spotted a significant drop in consumption sentiment so far,' Ng said. 'We still expect year-on-year growth of about 20 per cent for 2012.'

While credit card spending grew by just five per cent in April, a rebound in May lifted the total for the two months, Ng said.

Citibank's first-quarter growth in credit card spending was nearly double that of Bank of China, which saw a 16.5 per cent rise in the first quarter. Ng said it was also several times higher than the market average, due to the bank's focus on high-spending customers. Citibank's charge-off and delinquency ratio were on par with the market - which is around 1.59 per cent and 0.21 per cent during the first quarter, she said.

While at least six banks - including Hang Seng, HSBC, Bank of China and Bank of Communications, have recently announced plans to raise interest rates charged for credit cards and cash advances, Ng said Citibank was not lifting its rates yet.