Q1 credit card debt skyrockets

By Cong Mu

The nation’s six-month overdue credit card debt rose to 4.97 billion yuan ($730 million) at the end of the first quarter, up 133.1 percent from the same period last year, according to the latest report released by the People’s Bank of China (PBC).

Credit card debt made up 3 percent of total debt due at the end of March, 0.6 percentage points higher than the same period last year.

Financial institutions should be cautious about potential risks caused by the continuous rise of overdue credit card debt, the PBC report stated.

“Seemingly significant, the rise may be due to the low base effect of last year,” Wen Chunling, associate director of Fitch Ratings China, a leading credit rating agency, told the Global Times.

She said that because the data indicates that the non-performing loan (NPL) ratio for the first quarter did not increase rapidly, risks associated with credit card debt remain under control.

The actual NPL ratio for the first quarter was 2.04 percent at the end of March, down from 5.78 percent from the same period last year, according to China’s banking regulator.

However, Wen said that the risks were growing as commercial banks have loosened credit card approval standards due to fierce competition.

A total of 1.89 billion bank cards were issued by the end of the first quarter of the year, according to the PBC report.
 

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