IMGCAP(1)]
Credit card loans in China could reach US$200 billion (153.8 billion euros) by 2010, making the value of such loans second only to mortgages for the country's banks, according to "Retail Banking in China," a report from United States-based Celent LLC. The value of credit card loans reached an estimated US$50 billion in 2008. Despite the potential growth in credit cards as Chinese consumers become more comfortable with borrowing instead of using cash, Chinese banks earn relatively modest incomes from their credit card portfolios, the report says. For instance, China Merchants Bank, which the report says holds the largest share of the country's credit card loan market, earned on average US$12 per card in 2007. The report blames that partly on the "extremely low" annual fees issuers charge. China Merchants Bank, for example, charged an average of 73 U.S. cents per card in 2007 compared with US$20 for U.S. issuers. Chinese issuers also have relatively low transaction charges, relatively long "interest-free" periods, low late-payment fees and consumer reluctance to revolve credit card balances. "Credit cards remain primarily a payment tool, and their borrowing function has not been fully exploited," writes Hua Zhang, the report's author.
