Last year, the credit card issuance scale of five banks exceeded 100 million, and the retail sector became the main business force.

　　The recent intensive bank annual reports show that the retail business is becoming an important source of income for many banks, accounting for even more than half of the revenue in some joint-stock banks. Among them, credit card business has become the "main force" of bank retail business. In the past year, the volume of cards issued by five banks, including ICBC, CCB and BOC, has exceeded 100 million, and the total credit of credit cards has also increased significantly. Experts said that the enhancement of consumption driving force and the promotion of strict financial supervision are the main reasons driving banks to launch their retail business. Among them, the operation mode of credit card business is relatively simple and the profit mode is diverse, which has become the main force point of bank retail business. However, it is worth noting that with the substantial increase in the number of cards issued, the non-performing rate of credit cards has also risen, and the risks brought about by this are worthy of vigilance.

　　What is the focus on retail business?

　　The annual reports of many banks show that retail business is becoming an important source of income, accounting for more than half of the revenue in some joint-stock banks. For example, in 2018, China Merchants Bank’s retail financial business revenue was 123.257 billion yuan, a year-on-year increase of 16.04%, accounting for 52.69% of the total revenue. Ping An Bank’s retail business revenue was 61.883 billion yuan, a year-on-year increase of 32.5%, accounting for 53.0% of the total revenue. The net income of retail business of Shanghai Pudong Development Bank was 66.326 billion yuan, with an increase of 16.15%, accounting for 42.48% of the bank’s net operating income, making it the largest revenue segment.

　　The Postal Savings Bank, which was included in the sequence of "large state-owned commercial banks" for the first time this year, also made clear its strategic goal of continuing to develop its retail business. At the performance conference of the Postal Savings Bank, Zhang Jinliang, the proposed chairman, said that the Postal Savings Bank will adhere to the strategic vision of "building a first-class large-scale retail commercial bank" and continue to consolidate the strategic foundation position of the retail business. Around this strategic goal, the Postal Savings Bank is now vigorously promoting business transformation.

　　Why are banks so enthusiastic about retail business? Dong Ximiao, vice president of Chongyang Financial Research Institute of Renmin University of China, said in an interview with the Economic Information Daily that there are important internal and external reasons why commercial banks have invested in retail business. First of all, China’s economic environment has entered a stage of high-quality development, and consumption has become the first driving force for economic growth, promoting the development of bank retail business. Secondly, with the continuous promotion of strict financial supervision, the regulatory requirements for corporate business and inter-bank business of banks have been continuously improved, some businesses have shrunk, and retail business has become a new growth point. The narrowing of spreads, financial disintermediation and the increase of bad pressure also make the development of retail business an inevitable trend. In addition, the development of financial technology also brings more opportunities to the retail business of banks.

　　However, Dong Ximiao also said that the strategic strength of banks in retail business remains to be seen. "The investment cost of retail business is high. Most of the existing retail business models are characterized by cost-driven and crowd tactics, which are time-consuming and laborious, difficult to make profits and slow to get results." He said.

　　The surge in credit card volume has spurred revenue growth.

　　Among many retail businesses of banks, credit card business is particularly eye-catching. As can be seen from the annual reports of many banks, the volume of credit cards soared in 2018, and the credit card business became the "main force" for banks to transform into retail business.

　　The report on the overall operation of the payment system released by the central bank recently shows that in the past two years, the number of credit cards issued in China has increased by 221 million; The per capita holding of credit cards rose from 0.31 to 0.49. The total credit granted by bank cards increased by 6.26 trillion yuan, while the balance of credit payable increased by 2.79 trillion yuan.

　　This "Great Leap Forward" momentum of credit cards can also be seen from the 2018 bank annual report. According to the annual report of CITIC Bank, by the end of last year, the bank had issued a total of 67.05 million credit cards, an increase of 35% over the end of last year. In the whole year, 17.48 million new cards were issued, an increase of 43% over the previous year. According to the disclosure of Shanghai Pudong Development Bank, by the end of last year, the bank had issued 56.5 million credit cards, a year-on-year increase of 37%; The number of cards in circulation was 37.5 million, an increase of 40% over the end of last year.

　　Judging from the overall scale of credit card issuance by banks, among the banks that disclose credit card performance at present, ICBC occupies a dominant position in terms of scale, with the total number of credit cards reaching 151 million. In 2018, after ICBC, CCB and China Merchants Bank, the card issuance scale of BOC and ABC also exceeded 100 million.

　　Dong Zheng, a credit card researcher, said in an interview with the Economic Information Daily that the reason why credit cards can become the focus of banks’ retail efforts is because they have obvious advantages compared with other traditional retail businesses. First of all, the credit card business relationship is relatively simple. "Unlike savings cards, credit cards don’t need deposits or funds. Cardholders can conduct corresponding business operations without establishing traditional account relationships with banks. For banks, the business model is simpler." Dong Wei said. Secondly, Dong Zheng pointed out that credit card development scenarios and profit models are more diverse, and people can be subdivided through consumption characteristics to achieve accurate positioning of different customers.

　　With the rapid increase in the volume of credit cards, credit card transactions have increased substantially, and the income of related businesses has also risen. According to the annual report data, in 2018, China Merchants Bank’s credit card operating income reached 66.7 billion yuan, ranking first among the banks that have announced the credit card business revenue. Everbright Bank is 39 billion yuan, with a growth rate of over 39%, ranking first in the growth rate.

　　Wang Ximei, an analyst at Analysys Financial Center, told reporters that in the transformation of the bank’s retail business, the credit card business has strong profitability, which can also drive the development of other banks’ businesses and bring a large increase in revenue for banks. At present, the main income sources of credit cards are interest income and installment fees. Interest income mainly comes from the interest charged by the bank for the cardholder’s failure to fully repay the credit card overdraft; The installment fee is the fee charged by the bank for the cardholder’s installment repayment, including cash installment, bill installment, consumption installment and merchant installment.

　　The risk of rising credit card non-performing rate needs to be vigilant

　　According to central bank data, as of the end of 2018, the total outstanding credit of credit cards overdue for half a year was 78.861 billion yuan, accounting for 1.16% of the credit balance of credit cards, down 10.48% from the previous month, but up 18.92% from the same period last year. Insiders pointed out that it can be seen from the data that although year-end supervision has played a certain role in risk management and control, credit card risks are still under great pressure as a whole.

　　From the perspective of specific banks, the non-performing rate of credit cards in some banks has also shown signs of rising. For example, in 2018, the balance of credit card non-performing loans of CITIC Bank was 8.195 billion yuan, with a non-performing rate of 1.85%, up 0.61 percentage points from the end of last year; The overdue credit card loans reached 15.85 billion yuan, with an overdue rate of 3.59%, up 0.84 percentage points from the end of last year. The balance of credit card non-performing loans of Shanghai Pudong Development Bank was 7.832 billion yuan, with a non-performing rate of 1.81%, up 0.49 percentage points from the end of last year, and rising for two consecutive years. The NPL ratio of credit card loans of Ping An Bank was 1.32%, up 0.14 percentage points from the end of last year.

　　In view of the risk of credit card business, the annual report of CITIC Bank pointed out that in recent years, personal consumer finance business has developed at a high speed, personal loan business has gradually expanded from commercial banks to various consumer finance companies and Internet platforms, and the phenomenon that individual consumers borrow from many financial or quasi-financial institutions at the same time is increasing. Affected by the macro-economic and regulatory environment, the asset quality of the co-debt customers has shown some signs of deterioration, and it has affected the credit card industry to some extent.

　　Dong Zheng said that the current credit card risks mainly come from Internet finance fields such as online loans. "For example, some people rely on credit cards to cash out and then invest their money in online lending platforms. Once these online lending platforms have problems, the corresponding risks will be transferred to the issuing bank." He said. In this regard, he said that banks should strengthen big data risk control, effectively screen high-quality customers and reduce potential risks. At the same time, banks should also reasonably control the credit line, do not blindly take high credit as bait to attract customers, but also avoid multi-head credit and repeated credit.

　　Wang Ximei said that the sharp increase in credit card issuance may have potential risks such as excessive credit to low-end customers and joint debt. Credit card risk management can be strengthened by optimizing customer base structure, focusing on tapping high-quality customers, optimizing credit card risk control system and strengthening overdue collection of credit cards.