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SCMP Reporter

In a first for Hong Kong, the bank will reassess the risk profile of existing customers

Fubon Bank was reviewing the risk level of new and existing customers using information from TransUnion's positive credit database, senior vice-president Shera Lee Yee-cheung  said yesterday.

The bank is the first in Hong Kong to announce the move for existing customers.

Other banks have previously said they would use the database to tap information only for new customers.

Ms Lee, who is also Fubon's head of consumer banking, said the bank would use the data to adjust credit card and personal loan interest rates, as well as credit limits, for existing customers.

She added that for new customers, the information would help streamline their credit approval process.

'Information from the database will let us know about the customers' other unsecured loans - for example, how many credit cards they have at other banks or whether those cards are over-utilised,' she said.

The review process began on June 4 and was part of an ongoing process, Ms Lee said.

'In principle, we could do a review of all our customers in a year, but because there is cost involved, we are aiming to look at a meaningful sample of around 10,000 customers,' she said.

'That will allow us to draw inferences of our customers' behaviour.

'We're not looking at this as a specific project or as a process that we will complete by a certain time.

'We will continue to conduct similar periodic reviews in the future.'

Ms Lee did not elaborate on the cost of the review process.

Fubon  has more than 100,000 customers. The bank had already offered personalised interest rates on its credit cards before positive credit information became available.

Interest rates on Fubon credit cards  range from 13 per cent to more than 20 per cent but Ms Lee said the average rate was between 17 and 18 per cent.

The bank was also revamping personal loans to a more elaborate tiered system, she said.

She declined to disclose further details but said an announcement on the subject would be made next month.

Meanwhile, Ms Lee said the recent round of interest-rate increases had relieved some-short term pressure on the bank. But the spread between effective mortgage rates and the Hong Kong interbank borrowing rate  remained narrow, she said.

'There is still room for further tightening of mortgage rates,' Ms Lee said.

She added that banks were experiencing  pressure on funding costs as customers increasingly shifted their deposits away from low interest-bearing options such as current and saving accounts.

Low interest-bearing deposits as a percentage of deposits at Fubon Bank fell from more than 30 per cent at the end of last year to about 20 per cent at present, Ms Lee said.



Fubon widens checks from credit database