American Express expects Asian affluent customers to spend more than Americans

Amex's Susanna Lee says favourable demographics and robust growth in the numbers of wealthy individuals in Asia encourage the firm to focus more on the region

PUBLISHED : Monday, 05 August, 2013, 12:00am
UPDATED : Tuesday, 06 August, 2013, 6:59pm

American Express, one of the world's biggest credit card issuers, expects to see Asian affluent customers to spend more than their American peers in the next few years, thanks largely to the region's fast increasing super-rich individuals, who include many millionaires in Hong Kong and on the mainland.

Susanna Lee, Amex's general manager for proprietary card services in Hong Kong, said favourable demographics and robust growth in the numbers of wealthy individuals in Asia offered a strong commercial incentive for the firm to put a greater focus on card business expansion in the region.

"The number of millionaires in Asia, which already has 3.6 million high-net-worth individuals - defined as those with at least US$1 million in liquid assets excluding properties - is growing at an annual rate of 9 per cent," Lee said.

"That's faster than the growth in the region's economic output at 5.7 per cent."

North America's super-rich have a combined wealth of US$11.4 trillion, ahead of the US$10.7 trillion commanded by the super-rich of Asia, and US$10.1 trillion in Europe, according to a recent research report by global consultancy firm Capgemini and Royal Bank of Canada.

Despite falling stock markets on the mainland, the rapid growth of high-net-worth individuals there would help Asia-Pacific top the United States in millionaire numbers over the next three years, according to the report released last month.

Average spending by Amex cardholders is four times higher in Asia than the global market average, which Lee attributed to tailor-made services in travel and dining. However, while the outlook for the credit card business in this environment looked promising, competition between card companies and banks was "stiff" and spending patterns by consumers changed swiftly, she said.

A spokesman for MasterCard said Hong Kong's credit card business outlook remained strong and it also saw big potential in mobile payment services in addition to traditional card business. Visa declined to comment due to its earnings season.

Lilian Chong, head of card business at Dah Sing Bank's retail banking division, said both interest and fee incomes were under pressure because of fast-rising industry competition, and banks therefore had to enrich their current products and services to bring in new income streams.

Mak Wing-sang, head of credit card business at Industrial and Commercial Bank of China (Asia), said he was optimistic about the outlook for credit card spending in the second half of this year, but since Hong Kong was a mature market he did not expect card spending to grow substantially in the next one to two years.

However, Mak expected the issuance of cards and card spending to be much more robust on the mainland.

In Hong Kong, Amex would focus on the promotion of its signature Centurion Card, said Lee. Known informally as the "black card" it is popular among high-flying investment bankers.

The number of credit cards in issue in Hong Kong rose by 5 per cent to 17.6 million in the first quarter of this year from the same period a year earlier, and card spending rose 4.2 per cent.