Amid Mortgage Downturn and Rising Credit Card Defaults, What's Next for Retail Lending?(AI Translation)
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文｜财新周刊 朱亮韬 张宇哲
By Caixin Weekly's Zhu Liangtao, Zhang Yuzhe
受个人住房按揭贷款这一传统零售贷款“发动机”熄火的拖累，2023年银行业零售贷款规模的增速放缓。
In 2023, the growth rate of retail loan volumes in the banking sector slowed down, weighed down by the stall of the traditional retail lending "engine" of personal mortgage loans.
据标普信评的统计，2023年三季度末，国内零售贷款规模同比增速为6.85%，较2022年三季度末同比增速下降32个基点。其中，个人住房贷款规模同比下降1.29%，信用卡贷款规模同比下降1.56%，而个人经营贷款规模同比上升18.16%。
According to statistics from S&P Global Ratings, by the end of the third quarter of 2023, the scale of domestic retail loans grew by 6.85% year-over-year, a decrease of 32 basis points compared to the end of the third quarter in 2022. Among these, personal housing loan volumes decreased by 1.29% year-over-year, credit card loan volumes declined by 1.56%, while personal business loans saw an increase of 18.16%.
主要银行的年报数据和全国统计数据显示，目前这一趋势仍在继续。央行数据显示，受楼市下行影响，2023年末全国个人住房贷款余额38.17万亿元，同比下降1.6%，是自1997年以来首次出现负增长。银行年报数据显示，截至2023年末，六大国有银行的按揭贷款余额合计约为26.43万亿元，同比减少5166.26亿元、降幅1.95%。而在披露个人住房贷款不良率的11家银行中，有8家不良率上升，1家持平，2家下降。
Annual reports from major banks and national statistics indicate that the current trend is ongoing. According to data from the central bank, affected by the downturn in the real estate market, the balance of personal housing loans nationwide at the end of 2023 stood at 38.17 trillion yuan, a year-over-year decrease of 1.6%. This marks the first negative growth since 1997. Bank annual reports reveal that by the end of 2023, the combined mortgage loan balance of the six major state-owned banks amounted to approximately 26.43 trillion yuan, down by 516.626 billion yuan or a decline of 1.95%. Among the eleven banks that disclosed their non-performing rates for personal housing loans, eight experienced an increase in bad loan rates, one remained stable, and two saw a decrease.
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- In 2023, the growth rate of retail loans in the banking sector slowed due to a decline in personal housing mortgage loans, traditionally a major component of retail lending. By the end of Q3 2023, the year-over-year growth rate of domestic retail loans was 6.85%, a decrease of 32 basis points from the same period in 2022.
- The balance of personal housing loans nationwide by the end of 2023 was ¥38.17 trillion, marking a year-over-year decrease of 1.6% and the first negative growth since 1997. Major banks reported similar trends with a collective reduction in mortgage loan balances amounting to ¥5166.26 billion, or a decline of 1.95%.
- Amidst these challenges, banks have shifted focus towards consumer loans targeting high-quality customer groups and personal business loans aimed at individual entrepreneurs and rural households, seeing these as areas with potential for growth despite existing financing difficulties for these groups.
In 2023, the retail loan sector in banking experienced a slowdown, particularly in personal mortgage loans which have traditionally driven growth. S&P Global Ratings reported a year-over-year increase of only 6.85% in domestic retail loans by the third quarter of 2023, with personal housing loans decreasing by 1.29% and credit card loans by 1.56%. However, personal business loans saw an increase of 18.16% [para. 1].
The decline in personal housing loans is attributed to a downturn in the real estate market, with a significant drop to 38.17 trillion yuan by the end of 2023, marking the first negative growth since 1997. The combined mortgage loan balance of major state-owned banks also fell by about 1.95%. This trend was accompanied by rising non-performing rates for housing loans among several banks [para. 1].
Retail lending strategies are shifting focus due to these changes. Consumer loans targeting high-quality customers with low risk are becoming more prominent, with interest rates dropping to around 3%. Despite their role in supporting consumption recovery, their limited customer base restricts potential growth [para. 2]. Meanwhile, personal business loans are gaining attention as they cater to individual entrepreneurs and rural households, addressing long-standing financing issues faced by these groups [para. 2].
Credit card businesses are also facing challenges; there has been a noticeable contraction during the pandemic years and beyond due to increased bad debts and reduced issuance activities. Some smaller banks have even closed their credit card operations or merged them with other departments [para. 2].
Mortgage lending has weakened further due to sluggish real estate markets and increased early repayments influenced by previously high-interest rates on existing mortgages. Regulatory adjustments aim to address these issues; for instance, lowering interest rates on first-time home loans and cracking down on illegal loan intermediaries who misuse business loans for mortgage repayments [para. 3][para. 4].
On another front, credit card issuances have declined significantly since reaching a peak in late 2022. Major banks like China Merchants Bank and Industrial and Commercial Bank of China reported reductions in credit card circulation throughout 2023 [para. 5]. The industry faces pressures from regulatory tightening aimed at curbing aggressive expansion practices and managing risks associated with dormant cards and cash-out schemes [para. 5][para. 6].
Consumer lending is emerging as a new focal point within retail banking due to its higher yield compared to other loan types like mortgages or microloans. Major national banks reported substantial growth in consumer loan portfolios throughout 2023 [para. 7]. Regulatory policies have encouraged this shift towards consumer finance as part of broader efforts to support economic recovery through enhanced financial services for consumers [para. 7].
Overall, while traditional segments like mortgage lending face declines, new paths such as consumer lending offer potential for growth within the retail banking sector amidst evolving market conditions and regulatory landscapes[para. 8].
- China Merchants Bank
招商银行 - China Merchants Bank's retail lending structure has shifted due to the slowdown in growth of credit card and housing mortgage loans in 2023. The bank's Vice President, Peng Jiawen, mentioned this change during a performance conference at the end of March 2023.
- Bank of Communications
交通银行 - The article does not provide specific information about the Bank of Communications. It discusses general trends in the banking industry, such as the decline in personal mortgage loans and credit card loans, and shifts towards consumer loans and business loans for small enterprises. For details on a particular bank like the Bank of Communications, please refer to their official reports or specific news articles.
- Zhejiang Mintai Commercial Bank
浙江民泰商业银行 - Zhejiang Mintai Commercial Bank, along with other banks like Changsha Bank and Postal Savings Bank of China, announced the suspension of issuing certain co-branded cards as of late March 2024. This decision is part of a more conservative card issuance strategy adopted by multiple banks in response to the overall contraction and challenges facing the credit card industry.
- Changsha Bank
长沙银行 - Changsha Bank is among several banks that announced the suspension of issuing certain co-branded cards as of late March 2024. This decision aligns with a more conservative card issuance strategy adopted by multiple banks in response to the overall contraction and increased scrutiny within the credit card industry.
- Postal Savings Bank of China
邮储银行 - The article does not provide specific details about the Postal Savings Bank of China. It mentions several other banks and discusses general trends in the banking industry, such as the challenges and changes in retail lending practices, but the Postal Savings Bank of China is not specifically addressed in the provided content.
- Ping An Bank
平安银行 - Ping An Bank, known for its retail business, reported a decline in its credit card loan balance by 11.2% in 2023, reaching 5140.92 billion yuan. The bank's non-performing loan (NPL) rate for credit cards reached 2.77%, and the NPL rate for personal consumer loans, which make up 16% of total loans, rose to 1.23%.
- Industrial Bank Co., Ltd.
兴业银行 - Industrial Bank Co., Ltd. is mentioned in the context of its credit card business development trends and challenges. The bank's Vice President, Zhang Min, commented during a performance briefing that although the overall risk trend for credit cards is improving, the business still faces pressures. Industrial Bank has experienced a decline in credit card transaction volumes and an increase in bad loan rates.
- China Everbright Bank
光大银行 - The article does not provide specific information about China Everbright Bank. It mainly discusses the general trends and challenges in the retail lending sector of Chinese banks, including issues related to mortgage loans, credit cards, and consumer loans across various banking institutions. For details on China Everbright Bank specifically, additional sources would be required.
- CITIC Bank
中信银行 - CITIC Bank has adopted a surprisingly proactive retail strategy for 2024, which may be linked to its overall strategic goals. At a recent performance briefing, CITIC Bank reiterated its "retail first strategy" introduced in 2023 and announced plans to accelerate its implementation from 2024 to 2026, focusing on high-quality execution.
- Bank of Ningbo
宁波银行 - The article does not provide specific information about Bank of Ningbo. It mainly discusses the general trends and challenges in the retail lending sector within Chinese banks, focusing on issues like mortgage loans, credit card shrinkage, and the growth of personal business loans. Bank of Ningbo is not mentioned in the provided text.
- Shanghai Pudong Development Bank
浦发银行 - The article does not provide specific details about Shanghai Pudong Development Bank. It mainly discusses the general trends and challenges in the retail lending sector among Chinese banks, focusing on issues like mortgage loans, credit card shrinkage, and the strategic shifts towards consumer and business loans.
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