The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) the results of its survey on credit card receivables as at end-March 2002.
The first quarter saw a further rise in the quarterly (annualised) charge-off ratio to 9.04% and in the delinquency ratio to 1.90%, compared with 8.27% and 1.28% respectively for the fourth quarter of 2001. The continuing deterioration in the quality of the credit card portfolios is not unexpected given the further rise in personal bankruptcies and the earlier charge-off of accounts (when a bankruptcy petition is presented) by more institutions.
Reflecting efforts by reporting institutions to tighten up on credit card financing and increased charge-offs by institutions, total receivables fell by 2.8% in the first quarter. The total number of credit card accounts increased by 1.7%.
The rollover ratio increased to 55.9% from 53.2%.
"The continuing deterioration in the quality of credit card receivables highlights the need to share positive consumer credit data," said Mr David Carse, Deputy Chief Executive of the HKMA. "It also highlights the importance of banks considering very carefully their policies on credit limits and on the issue of new cards."
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
14 May 2002
Annex
Survey on Credit Card Receivables
| |
23 reporting institutions |
27 reporting institutions |
| |
Mar 01 |
Jun 01 |
Sep 01 |
Dec 01 |
Mar 02 |
| Total number of accounts ('000) |
7,485 |
7,922 |
8,400 |
9,217 |
9,376 |
| quarterly change (%) |
+4.5 |
+5.8 |
+6.0 |
N/A |
+1.7 |
| yearly change (%) |
+25.7 |
+24.2 |
+26.1 |
N/A |
+25.3 |
| |
| Total receivables (HK$ Mn) |
51,485 |
54,521 |
56,505 |
62,050 |
60,331 |
| quarterly change (%) |
+0.5 |
+5.9 |
+3.6 |
N/A |
-2.8 |
| yearly change (%) |
+27.6 |
+24.4 |
+20.5 |
N/A |
+17.2 |
| |
| Delinquency ratio (%) |
0.93 |
1.00 |
1.13 |
1.28 |
1.90 |
| |
| Charge-off ratio (% annualised) |
3.68 |
4.60 |
5.33 |
8.27 |
9.04 |
| |
| Rollover ratio (%) |
55.2 |
55.3 |
55.1 |
53.2 |
55.9 |
Survey on the Banking Sector's Credit Card Receivables
Notes to Press Release
- 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.
- Credit card receivables in the survey refer to credit card receivables from individual credit cardholders.
- Credit card receivables are classified as overdue when a payment is past due at the last day of the reporting month (see also Note 7 below). 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.
- Charge-off ratio refers to the total amount of credit card receivables written off during a period as a percentage of the total credit card receivables at the end of that period. The charge-off policy may vary among authorized institutions. 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). To facilitate comparison among AIs (especially for those which may provide charge-offs at different intervals during the year), the charge-off ratio is annualised.
- The delinquency ratio provides an early indication of the quality of the credit card portfolio while the charge-off ratio measures the gross credit loss of that portfolio to an authorized institution over a specified period of time. The two ratios are complementary to each other in that the delinquency ratio takes into account those credit card receivables overdue for more than 90 days and not yet written off, whereas the charge-off ratio relates mainly to seriously overdue receivables (e.g. overdue for more than 180 days) that were written off during the specified period. Since the charge-off ratio is annualised but the delinquency ratio is measured based on the month-end position, the former is usually greater than the latter.
- Rollover amount of a credit card account is the amount outstanding at the previous statement date less any amount paid between the previous statement date and the current statement date.
- Accounts with rollover amount are those accounts in respect of which the cardholder has repaid at least the minimum amount of payment required by the authorized institution but has not fully repaid the statement balance. Such accounts are not regarded as overdue. An account is overdue when the minimum payment is not made upon the due date.
- 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.
