Banks have to take a series of measures to tighten risk control, such as derating, limiting, and even restricting consumption scenarios, such as not being able to use credit cards to buy luxury goods, etc. Lately, credit card overdues have begun to explode.

Banks have had to take a series of actions to tighten risk control, such as derating, limiting, and even restricting consumption scenarios, such as not being able to use credit cards to buy luxury goods, etc.

A large number of users also reported that their credit card limits were reduced. One user's limit was directly reduced from 50,000 yuan to 1,000 yuan, and some people even had their limit reduced from 100,000 yuan to 0 yuan.

Risk control directors of some financial institutions said that only by tightening risk control can we protect ourselves.

In an interview with a financial magazine, the former CRO of Discovery Finance in the United States put forward a different point of view: Maybe if you let go now, you will not miss the opportunity...

01. Overdue outbreak

Recently, many bank executives revealed that overdue bank credit cards are on the rise.

As early as early February, the wave of overdue bank credit cards began to appear.

"But there was a deferred repayment policy at the time, and some risks had not yet been exposed." Li Bing, a bank practitioner, said.

On March 23, Tian Huiyu, President of China Merchants Bank, said that throughout February, the credit card overdue rate increased significantly year-on-year.

Hou Weidong, Vice President of Bank of Communications, also admitted that in 2020, Bank of Communications' asset quality may rebound to a certain extent.

"In the past month, a large number of users have said they can't pay. We can receive thousands of extension applications a day." Li Bing said.

"Most of the overdue users are small credit card users with a limit of less than 100,000 yuan." Li Bing believes that the underlying credit card users have been significantly affected.

At the same time, the credit limits of a large number of users have been reduced.

Many users were quickly derated after receiving a risk warning text message. A Shanghai Pudong Development Bank credit card user said his limit was directly reduced from 13,000 yuan to 2,500 yuan.

And in forums such as I Love Card, Canon and some brother communities, there are overwhelming complaints about being downgraded.

"50,000 yuan turned into 1,000 yuan." "100,000 yuan quota directly turned into 0 yuan." "50,000 yuan quota directly reduced." and so on.

Some users posted the derating reminder text message they received online

“The derating is being reduced now to reduce risk exposure and survive the crisis.” Risk control from a bank The person in charge revealed that their list of users who need to reduce their quota recently is "a long list every day."

In addition to reductions, some banks have also begun to set consumption limits.

"Now some users of CITIC Bank credit cards cannot spend more than 1,000 yuan in a single transaction." Wu Min, a credit card intermediary, revealed.

The complaint website received multiple complaints from CITIC users about credit reductions

Some users reported that banks such as Industrial Bank, Guangfa, and Shanghai Pudong Development Bank have also begun to limit the amount of single consumption.

Some credit cards even have usage scenario restrictions, for example, "some users may not be able to use their cards to buy luxury goods."

At the same time, credit card approval is also being tightened.

"The cards that could be approved last year are almost impossible to pass now, and the pass rate has become much lower. More than 10 out of 10 is considered high." Wu Min said.

As a result, many credit card intermediaries are almost paralyzed.

"In the past, card application intermediaries have now changed their industries to provide insurance and interest refunds." Wu Min said.

At the same time, credit card limits have also become very low.

"In the past, 50,000 yuan could be approved, but now it may only be 5,000 to 10,000 yuan."

Overdue fees have skyrocketed, credit card limits have been reduced, and card issuance has been tightened. After the epidemic, there has been a full wave of overdue loans. Has it arrived yet?

02. Reasons for the outbreak

Why did credit card overdues begin to explode?

The core reason is the epidemic - it leads to users' refunds Both ability and willingness to repay have declined.

“Many extension applications sent in by users have very miserable conditions, such as job loss and business closure,” Li Bing said.

Among them, there are also a group of small and medium-sized business owners who "directly applied for corporate bankruptcy and failed to pay off their credit cards."

In addition, there are also a large number of collection teams that are unable to resume work due to the epidemic.

"For China Merchants Bank, there may be a special factor: 40% of our credit card collection capacity is in Wuhan. This 40% is the strongest credit card collection capacity of China Merchants Bank." Tian Huiyu, President of China Merchants Bank expressed recently.

“But I can’t go to work during this period, so the credit card business will be affected the most in February.” He said.

Some bank practitioners revealed that they have been forced to start building their own collection teams.

Li Bing revealed that in addition to outsourcing part of the collection business, they “also allocate their own people to work together.”

Another important reason for the overdue increase is that without new increments, the denominator cannot continue to grow.

Not long ago, Qu Liang, vice president of China Everbright Bank, also confirmed this at the results meeting.

He said that offline sales staff's business has been affected by the epidemic, and customers' willingness to apply for cards in person has also been affected by the epidemic, which has slowed down the speed of card issuance in the near future.

Against this background, banks have also begun to reshuffle themselves.

“Nowadays, credit card sales staff have begun to switch to phone customer acquisition and phone collection work.” Li Bing said that he was originally a sales staff, but now he has become a person who reviews incoming goods for compliance.

The pressure on transfer employees is very high. Li Bing revealed that an employee in his bank was unable to complete his performance and even asked his wife to make phone calls for him. "In the end, he was found out and the employee was fired."

At the same time, the pressure on banks is also very high. "There is basically no online traffic now. A bank can easily support tens of thousands of employees and cannot cut salaries."

03 Risk control adjustments

"Currently, the risk control strategies of the entire bank are tightened." He Feng, the head of risk control of a joint-stock bank, said.

First of all, banks have tightened risk controls in some industries that have been seriously affected by the epidemic.

For example, for practitioners in transportation, catering, manufacturing, tourism and other industries, "we all carefully review and approve".

At the same time, derating, limiting limits, and reducing card issuance are also common means of risk control.

"Actually, tightening risk control now may not be a good strategy." Recently, the former CRO of Discovery Finance in the United States revealed this view in an interview with a financial magazine.

"All risks are not reflected immediately, and there is a delay of one to two months." He gave an example. For example, if a person loses his job, he will not start overdue immediately. It may take a month. It was only two months overdue.

And this kind of delay "determines that you cannot follow other people's risk control strategies, and you have to make advance predictions."

Having experienced the financial crisis in 2008, he knows the importance of predicting in advance.

"As early as March 2008, we monitored data problems in 4 states in the United States." What surprised him was that there were no problems in other states in the United States, only these 4 states. have.

Soon, he discovered that there was a homosexual in these four states - he was keen on real estate speculation.

He rushed to these states to investigate and found that the real estate market in these places had reached a crazy point. "A small manager has 4 houses under his name."

He sensed the risks. , and decisively tightened risk control.

Five months later, the financial crisis that swept the world broke out.

The United States, which tightened risk control in advance, found that the financial sector had just missed the crisis.

He was glad that he had escaped a disaster, but soon, he also missed the opportunity because he was too conservative.

After the financial crisis, the economy slowly recovered and began to continue to rise.

In fact, in the later stages of the 2008 financial crisis, although there were still a lot of unemployed people, there were no new ones. “This existing population is slowly decreasing.”

“At this time , There are fewer competitors on the market. If you give them some credit at this time and help them during the crisis, they will become your very loyal users," he said.

But after the financial crisis, they kept tightening and did not relax risk controls until the entire economy began to recover.

Because they were too conservative, they missed a large wave of high-quality customers.

Because it predicted in advance, the United States found that its finances had escaped disaster; but because it did not fully predict, it also missed a good opportunity.

"Risk control requires predictability. You must be the leader and cannot follow others to do risk control." said a former CRO of Discovery Finance in the United States.

He believes that after the epidemic is over, the economy will recover quickly, even faster than the 2008 financial crisis.

"The last financial crisis was an internal injury, but this time it is an external injury. After the external force is removed, the wound will heal quickly."

He believes that if the epidemic is predicted to It will end soon, so the current risk control of financial companies should not be tightened, but should be relaxed.

"Although the overdue amount has increased, you must also consider that the financing cost is low and the customer acquisition cost is also low." He believes that we must consider the overall return on capital and cannot just look at one index.

The risk control directors of some financial institutions hold the same view as him.

They predict that there may be a small consumption wave after the epidemic, and some financial institutions have begun to focus on this.

"In November last year, our card issuance volume exceeded one million." He Feng said frankly that the epidemic period was the peak period of card usage, and profits and income will definitely increase.

At the same time, the situation of joint-stock banks has also improved slightly.

Tian Huiyu said that starting from March, the situation of China Merchants Bank's credit cards has improved, and judging from the number of credit card transaction volume, it has basically reached normal levels.

Under the epidemic, the financial industry is full of crises and turmoil.

But this also means that an opportunity for a big reshuffle has come.

Just like stock trading, as long as the timing of entry and exit is correct, you may become the final winner.

*Some of the interviewees in this article have pseudonyms.