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Credit Card Lending Survey Results For First Quarter 2003

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

The delinquency ratio fell for the fourth consecutive quarter to 1.25%, compared with 1.28% at end of 2002. The fall was attributable in part to charge-offs and in part to the restructuring of problem card receivables by AIs. Over the year to end-March 2003, about HK$1.6 billion credit card receivables has been restructured, representing about 2.8% of total receivables.

The amount charged off in the first quarter also decreased, to HK$1.76 billion or 3.09% of average receivables during the quarter. Assuming the rate of charge-off is maintained for the next three quarters1 , the "annualised" ratio would be 11.82% compared with 13.45% in the previous quarter.

Total receivables declined by 7.9% following a marginal increase in the previous quarter. This reflects a number of factors, including the tightening of lending policies, contraction in consumer spending during the quarter, particularly in March following the outbreak of SARS, and the transfer of restructured card receivables from the card portfolio to other loan accounts (such as personal loan accounts) by some institutions. The decline in the total number of credit card accounts moderated to 0.3%.

The rollover amount, which reflects the amount of "borrowing" customers using their credit cards, fell to HK$30.4 billion from HK$32.1 billion as at end-2002, representing 55.7% of total receivables.

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
19 May 2003

1 Excluding certain charge-offs which will not be repeated in subsequent quarters and which it would not therefore be appropriate to annualise.


Survey on Credit Card Lending

Q1 02Q2 02Q3 02Q4 02Q1 03
Total number of accounts at period-end ('000) 9,376 9,488 9,377 9,098 9,072
Quarterly change (%) +1.7 +1.2 -1.2 -3.0 -0.3
Yearly change (%) +25.3 +19.8 +11.6 -1.3 -3.2
Total receivables at period-end (HK$ Mn) 60,331 60,260 59,183 59,247 54,567
Quarterly change (%) -2.8 -0.1 -1.8 +0.1 -7.9
Yearly change (%) +17.2 +10.5 +4.7 -4.5 -9.6
Average total receivables (HK$ Mn) 1 ( a ) 61,190 60,295 59,722 59,215 56,907
Delinquent amount > 90 days (HK$ Mn) 1,147 1,045 779 756 685
Delinquency ratio (%) 1.90 1.73 1.32 1.28 1.25
Charge-off amount (HK$ Mn)2 ( b ) 1,384 2,055 2,359 2,237 1,757
Charge-off ratios3
- quarterly % ( c = b / a ) 2.26 3.41 3.95 3.78 3.09
- quarterly %, annualised 9.04 13.63 14.554 13.454 11.824
- quarterly %, annualised (adjusted)5 8.6 12.7 12.4 12.8 11.5
- year-to-date %, annualised 9.04 11.24 12.75 13.25 12.35
Rollover amount (HK$ Mn) 33,753 33,611 33,081 32,076 30,391
Rollover ratio (%) 55.9 55.8 55.9 54.1 55.7



  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.
  5. Ratios are adjusted to remove the effects of all accounting policy changes to track the underlying trend in card quality.

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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