Card delinquency ratio falls with stricter control regime

Hong Kong's credit card delinquency ratio, a statistic first released in 1996, reached a historical low at the end of the third quarter, according to the Hong Kong Monetary Authority (HKMA).

The ratio, which measures the amount of credit card receivables overdue for more than 90 days over that of total card receivables, stood at 0.55 per cent, down from 0.64 per cent at the end of the second quarter and 1.23 per cent a year ago.

Some bankers said the improvement was a result of the tightening of card lending criteria, implemented since last year when banks' bad-debt ratios were at unprecedented high levels, and a recovering economy which they said had given consumers more 'feel good' factors.

'When banks carried out new policies it normally takes a while before you would see the net effect,' said DBS Bank (Hong Kong) managing director and head of consumer banking Sunny Cheung Yiu-tong.

'I believe we are beginning to see the effects of our credit tightening measures last year.'

Charge off amount also declined during the quarter, from the previous quarter's $721 million, or 1.34 per cent of the average receivables, to $608 million, or 1.13 per cent. The figures represented a drop of annualised charge off ratio from 5.37 per cent to 4.51 per cent.