Survey on the Banking Sector's Credit Card Receivables

The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) the results of its survey on credit card receivables as at end-December 2000.

This is a regular monthly survey, which the HKMA has been conducting since January 1996. The key results have hitherto been published in the HKMA Quarterly Bulletin. In order to provide greater market transparency on this type of business undertaken by authorized institutions (AIs), the HKMA will henceforth release the results of this survey on a quarterly basis.

The survey covers the 20 AIs engaged in credit card business and does not therefore cover card issuers that are not AIs.

According to the survey, the total number of credit card accounts and the total amount of credit card receivables rose by 24.5% and 27.7% respectively in the year to end-December 2000. Compared with the September quarter, the growth rates for the December quarter, in number and value terms, accelerated to 7.9% and 9.5% respectively from 4.5% and 7.0%.

The delinquency ratio (measured as the amount of credit card receivables overdue for more than 90 days as a percentage of total credit card receivables) and the quarterly charge-off ratio (annualised) increased to 0.76% and 3.72% respectively in the December quarter from 0.71% and 3.57% in the previous quarter, after falling for five consecutive quarters. The increase in the delinquency ratio reflected the growth in loans overdue for more than 90 days which outpaced that in total credit card receivables, while the increase in the charge-off ratio was in part due to a rise in the number of bankrupt cardholders.

The rollover ratio has been maintained at around 50% to 56% since it was first collected in April 1999, indicating that about half of total credit card receivables were attributable to rollover amounts. The ratio was 53.8% at the end of December 2000, up slightly from 52.8% at the end of September.

Please refer to the Annex for details of the survey results.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Caitlin Wong, Manager (Press), at 2878 1687

Hong Kong Monetary Authority

27 February 2001

1. Credit card receivables in the survey refer to credit card receivables from individual credit cardholders.
   

2. Credit card receivables are classified as overdue when a payment is past due at the last day of the reporting month (see also Note 6 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.
   

3. 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.
   

4. 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.
   

5. 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.
   

6. 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.
   

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.