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Credit Card Lending Survey Results for Second Quarter 2002

The Hong Kong Monetary Authority (HKMA) announced today (Friday) the results of its survey on credit card lending for the second quarter 2002.

The second quarter saw a decline in the delinquency ratio to 1.73%, from 1.90% at the end of first quarter. The decline was due in part to increased write-offs made by institutions in relation to personal bankruptcies.

The amount charged off in the second quarter was HK$2.06 billion or 3.41% of average receivables during the quarter. If this rate of charge-off were to be maintained for the next three quarters, the "annualised" amount of charge-offs would be HK$8.22 billion or 13.63% of average receivables. This compares with 9.04% in the previous quarter.

Adjusted to exclude the effects of a change in charge-off policies by some institutions in the quarter, the annualised charge-off ratio for the second quarter would have been about 12.68%.

Total receivables fell by 0.1% in the second quarter. This reflects a number of factors: charge-offs by institutions, and efforts by some to tighten up on credit card financing, and by others to help customers restructure card receivables (i.e. into personal loans). The total number of credit card accounts increased by 1.2%.

The rollover ratio decreased slightly to 55.8% from 55.9%, indicating that the proportion of customers using their credit card for "borrowing" remained stable.

"The increase in the charge-off ratios is hardly surprising in the light of rising unemployment as a result of the weakened economy and record high levels of personal bankruptcies in the second quarter," said Mr David Carse, Deputy Chief Executive of the HKMA. "There was some improvement towards the end of the quarter, but it is too soon to say whether this is an emerging trend."

For further enquiries, please contact:
Sylvia Yip, Manager (Press), at 2878 1687 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
16 August 2002


Survey on Credit Card Lending

23 reporting institutions 27 reporting institutions
Q2 01 Q3 01 Q4 01 Q1 02 Q2 02
Total number of accounts at period-end ('000) 7,922 8,400 9,217 9,376 9,488
quarterly change (%) +5.8 +6.0 N/A +1.7 +1.2
yearly change (%) +24.2 +26.1 N/A +25.3 +19.8
Total receivables at period-end (HK$ Mn) 54,521 56,505 62,050 60,331 60,260
quarterly change (%) +5.9 +3.6 N/A -2.8 -0.1
yearly change (%) +24.4 +20.5 N/A +17.2 +10.5
Average total receivables (HK$ Mn) 1 ( a ) 53,003 55,513 59,277 61,190 60,295
Delinquent amount > 90 days (HK$ Mn) 548 637 796 1,147 1,045
Delinquency ratio (%) 1.00 1.13 1.28 1.90 1.73
Charge-off amount (HK$ Mn)2 ( b ) 613 741 1,268 1,384 2,055
Charge-off ratios3( c = b / a )
- quarterly % 1.16 1.34 2.14 2.26 3.41
- quarterly %, annualised 4.62 r 5.34 r 8.55 r 9.04 13.63
- year-to-date %, annualised 4.10 4.52 5.46 9.04 11.24
Rollover amount (HK$ Mn) 30,165 31,159 33,009 33,753 33,611
Rollover ratio (%) 55.3 55.1 53.2 55.9 55.8



  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

r denotes revised figures due to a change in the compilation method

Shaded figures are newly introduced

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.
Last revision date: 1 August 2011
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