When the market share is already relatively high, what is the next step for the development of credit cards? This is a problem that banks need to face.
As a leading institution in the credit card field, China Merchants Bank proposed “prudently promoting the development of credit card business” in its 2021 annual report for the first time. Wang Jianzhong, deputy president of the bank, said that the specific implementation path is to control risks in the short term, adjust assets in the medium term, and adjust customer groups in the long term.
Previously, the China Banking and Insurance Regulatory Commission issued a risk warning to remind consumers to stay away from the marketing trap of excessive borrowing and guard against excessive credit risks; establish a responsible lending awareness, avoid uncontrolled excessive consumption and excessive debt, and choose formal Institutions handle financial services such as loans.
Preliminary exploration of ways to optimize customer group structure
Recently, China Merchants Bank announced its 2021 performance report. As of the end of the reporting period, the bank’s operating income was 331.253 billion yuan, and interest income was 327.056 billion yuan, year-on-year. An increase of 6.39%, of which credit card interest income was 59.645 billion yuan, a year-on-year increase of 5.87%, accounting for more than one-fifth.
When reporting its mid-year results in 2021, China Merchants Bank admitted frankly that in the context of the shift of credit cards from the incremental market to the existing market, the bank will proactively continue to optimize the customer group structure and continuously iteratively upgrade the team's business capabilities. , improve customer acquisition efficiency. In the 2021 annual report, the bank proposed for the first time to "prudently promote the development of credit card business" and stated that it is "continuing to optimize the customer group structure and reconstruct the credit card customer acquisition portfolio model."
From the specific data, at the end of 2021, the number of CMB credit cards in circulation was 102.416 million, an increase of 2.9% from the end of 2020; the number of circulation accounts was 69.7394 million, an increase of 4.54% from the end of 2020; the credit card transaction amount was 47636.17 billion, an increase of 9.73% compared with the end of 2020.
Dong Zheng believes that from the data point of view, the growth rate of new credit card customers of China Merchants Bank is not high, mainly because the bank’s credit card coverage rate is already very high; however, from the transaction In terms of amount, it can still maintain a growth rate of 9.73%, which shows that the bank has done a lot of effective work in attracting existing customers.
The difficulty in prudent adjustment lies in activating existing customers. It was disclosed in the performance report of China Merchants Bank that the bank is creating a "flywheel effect" of mutual promotion between lines and business units through business integration to enrich customer ecological scenarios. In terms of the retail "all-in-one" flywheel, China Merchants Bank has further promoted the integration of debit cards and credit cards in customer acquisition and integrated operations. Among credit card customers, "dual card" customers who hold CMB debit cards at the same time accounted for 62.61%, an increase of 1.91% from the end of 2020. percentage points.
At the same time, China Merchants Bank continued to optimize the customer group structure, reconstructed the credit card customer acquisition portfolio model, and at the same time gained insights into the needs of young customer groups, and launched the "FIRST Graduate Credit Card" for college graduates to build a new customer base for young customers. Customers and business systems.
China Merchants Bank adjusts the standards for determining overdue credit cards. China Merchants Bank pointed out in its 2021 annual report that the bank will continue to optimize its credit card customer base and asset structure, adhere to the principle of risk prudence, strictly implement asset classification policies, and comprehensively classify credit card loans that are overdue for more than 60 days as non-performing, and at the same time strengthen collection efficiency. , the risk level will stabilize and improve in 2021.
Relevant data shows that as of the end of 2021, China Merchants Bank’s new credit card non-performing loans were 29.206 billion yuan, a year-on-year decrease of 3.235 billion yuan; the balance of non-performing credit card loans was 13.846 billion yuan, an increase of 1.422 billion yuan from the end of 2020. The rate was 1.65%, a decrease of 0.01 percentage points from the end of 2020.
Wang Jianzhong pointed out at the bank’s annual report conference that under the influence of the epidemic, the credit card business is expected to face greater risk pressure due to the customer base it faces, and China Merchants Bank will continue to remain prudent. The strategy is to control risks in the short term, adjust assets in the medium term, and adjust customer base in the long term.
Dong Zheng said that the development of bank credit card business has been relatively extensive in the past few years. With the changes in the economic situation, P2P exposure, epidemic and other factors, credit risks have arisen for some credit customers, which has led to the decline of bank risk control strategies. Tighten, downgrade or expel some low-quality customers.
Supervision prompts the risk of excessive credit extension
The path to prudent development of credit card business is consistent with the direction of supervision.
Previously, the Consumer Rights Protection Bureau of the China Banking and Insurance Regulatory Commission issued the 2022 Issue 2 Consumer Risk Alert, reminding consumers to stay away from the marketing trap of excessive borrowing and guard against excessive credit risks; establish a responsible lending awareness and avoid reckless lending. Be restrained in excessive consumption and excessive debt, and choose formal institutions for financial services such as loans.
The China Banking and Insurance Regulatory Commission pointed out that by using big data information and accurate tracking, some institutions have tapped into users’ “consumption needs” and conducted excessive marketing regardless of consumers’ actual conditions such as comprehensive credit limit, repayment ability, and repayment sources. , inducing consumers to consume in advance, leading to risks such as excessive credit and debt exceeding personal affordability. The China Banking and Insurance Regulatory Commission reminded that consumers should know that after using consumer credit services, they need to repay the principal and interest on time in accordance with the contract. Credit card installments, credit loans and other interest rates may not be preferential. The comprehensive loan cost after calculating the annualized rate It may be very high, and excessive credit can easily lead to excessive debt.
From a banking perspective, Li Yelin believes that as consumers’ demand for credit products increases, they also have higher requirements for service levels. High growth will be unsustainable under an extensive business philosophy, and the credit card industry will surely shift to high-quality development. track.
In view of the fact that some banks blindly pursue economies of scale and market share, and issue cards indiscriminately and repeatedly, leading to disorderly competition, waste of resources and other problems, the China Banking and Insurance Regulatory Commission previously issued the "Opinions on Further Promoting the Standardized and Healthy Development of the Credit Card Business" Notice (Draft for Comments)" requires that the number of long-term sleep credit cards with no active customer transactions for more than 18 consecutive months and current overdraft balances and overpayments of zero shall not account for more than 20% of the institution's total card issuance at any point in time. , banks exceeding this ratio are not allowed to issue new cards.