Credit Card Lending Survey Results For Second Quarter 2003

Press Releases

19 Aug 2003

Credit Card Lending Survey Results For Second Quarter 2003

The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) the results of its survey of credit card lending for the second quarter of 2003.

The amount charged off in the second quarter decreased for the third consecutive quarter to HK$1.57 billion or 2.90% of average receivables during the quarter. Assuming the rate of charge-off is maintained for the next three quarters, the "annualised" ratio would be 11.60% compared with 11.82% in the previous quarter. The delinquency ratio increased slightly to 1.27% from 1.25%.

The total number of credit card accounts declined slightly by 0.8%, while the decline in total receivables moderated to 1.1%. Another HK$198 mn or 0.4% of total credit card receivables was restructured, of which about 68% was transferred outside the credit card portfolio.

The rollover amount, which reflects the amount of "borrowing" customers using their credit cards, fell for the fifth consecutive quarter to HK$29.0 billion from HK$30.4 billion as at end-March 2003 and represents 53.8% of total receivables.

"While the quality of the card portfolio will continue to be influenced by the economic situation and bankruptcy trend, the charge-off situation appears to have stabilised. This partly reflects the precautionary measures taken by the banks, as well as the continuing impact of debt restructuring arrangements." said Mr David Carse, Deputy Chief Executive of the HKMA.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
19 August 2003

Annex

Survey on Credit Card Lending

  Q2 02 Q3 02 Q4 02 Q1 03 Q2 03
Total number of accounts at period-end ('000)r 9,325 9,173 8,865 8,804 8,732
Quarterly change (%) +0.9 -1.6 -3.4 -0.7 -0.8
Yearly change (%) +17.7 +9.2 -2.6 -4.7 -6.4
 
Total receivables at period-end (HK$ Mn) 60,260 59,183 59,247 54,567 53,985
Quarterly change (%) -0.1 -1.8 +0.1 -7.9 -1.1
Yearly change (%) +10.5 +4.7 -4.5 -9.6 -10.4
 
Average total receivables (HK$ Mn) 1 ( a ) 60,295 59,722 59,215 56,907 54,276
 
Delinquent amount > 90 days (HK$ Mn) 1,045 779 756 685 688
 
 
Delinquency ratio (%) 1.73 1.32 1.28 1.25 1.27
 
Charge-off amount (HK$ Mn)2 ( b ) 2,055 2,359 2,237 1,757 1,574
 
Charge-off ratios3          
- quarterly % ( c = b / a ) 3.41 3.95 3.78 3.09 2.90
- quarterly %, annualised 13.63 14.554 13.454 11.824 11.60
- year-to-date %, annualised 11.24 12.75 13.25 12.35 11.77
 
Rollover amount (HK$ Mn) 33,611 33,081 32,076 30,391 29,019
Rollover ratio (%) 55.8 55.9 54.1 55.7 53.8

 

Note:

  1. Average during period (calculated as [opening stock + closing stock]/2 )
  2. Flow during period
  3. Calculated as flow during period as percentage of average receivables during period
  4. Excluding certain charge-offs which will not be repeated in subsequent quarters and which it would not therefore be appropriate to annualise. The year-to-date figures are not similarly adjusted.

r Revised from Q2 02 to reflect reporting amendments.

Survey on the Banking Sector's Credit Card Lending

Notes to Press Release

  1. This survey covers authorized institutions (AIs) and some subsidiaries of AIs that are engaged in credit card business. It does not cover card issuers that are not AI-related.
  2. Credit card receivables in the survey refer to credit card receivables from individual credit cardholders.
  3. The delinquency ratio is measured by the total amount of credit card receivables overdue for more than 90 days and remaining unpaid at the last day of the reporting month as a percentage of total credit card receivables. Credit card receivables are classified as overdue when a payment is past due on the last day of the reporting month (see also Note 6 below). The delinquency ratio provides an early indication of the quality of the credit card portfolio.
  4. Charge-off amount refers to the total amount of credit card receivables written off the loan book during a period (irrespective of when a charge is made to the profit and loss account, which may be earlier if it is the institution's policy to create provisions at an earlier time than the amount is written off). Charge-off policies vary from institution to institution. Normally, an account will be written off when the receivable has been overdue for more than 180 days or when the ultimate repayment of the receivable is unlikely (e.g. the cardholder is bankrupt or cannot be located).

    The quarterly annualised ratio foreshadows the extent of charge-offs that would be experienced if the current quarter's charge-off ratio were to be sustained for the next three quarters. The year-to-date ratio tracks the actual charge-offs to date and is annualised for purposes of comparison.
  5. The delinquency and the charge-off ratios are complementary to each other. The former takes into account those credit card receivables that at the reporting date had been overdue for more than 90 days but had not yet been written off. It is therefore an indicator of future charge-offs. The latter captures those receivables that were written off during the specified period because they were seriously overdue (e.g. for more than 180 days) plus those written off earlier than 180 days because they were considered irrecoverable (e.g. because the borrower has gone into bankruptcy).
  6. Rollover amount, representing "borrowing", is the amount within total receivables in respect of which the cardholder has not fully repaid the statement balance but has at least made the minimum amount of payment required by the authorized institution. It does not include amounts that are overdue. An account is overdue when the minimum payment is not made upon the due date.
  7. Rollover ratio refers to the percentage of total rollover amounts to total credit card receivables. While total receivables relate to the month-end position, total rollover amounts are based on balances recorded at the statement date.
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Last revision date : 19 August 2003