Chinese banks to report credit-card loans turned sour in first quarter as household debt mounts
- Chinese banks may report higher non-performing credit card loans in the first quarter
- Mounting household debt levels and rising unemployment to hurt credit card loan performance
Chinese banks are likely to report a growing pile of bad debt in their credit card businesses during the first quarter as the country’s rising household leverage, compounded by higher unemployment has caused more cardholders to fall behind on their repayments, according to bank officials and analysts.
While the regulator said the pick up in bad debt was driven by small businesses and catering companies, it failed to mention a rise in overdue credit card loans, analysts said.
China's history of credit card usage is still relatively short, as the first card was only launched in 1985 by Bank of China. Competition among Chinese banks in recent years has been intense, as they strove to expand their sources of fees and commission income to offset margin pressure in their lending business.