BANK OF CHINA(SH:601988) Di Yi Cai Jing·2025-08-04 11:45Core Viewpoint - China Bank plans to include litigation fees related to overdue credit cards in the credit card bills starting from September 14, 2025, initially piloting in Shanghai before expanding to other regions, reflecting the ongoing pressure on credit card asset quality in the industry [1][2][5]. Group 1: Policy Implementation - The new policy will incorporate various litigation-related fees, such as litigation fees, arbitration fees, and attorney fees, into the credit card bills, excluding interest and penalties [2]. - The implementation will occur in phases, starting with the Changning branch in Shanghai on September 14, followed by the Shanghai branch on October 11, and other regional branches from October 19 [3]. Group 2: Industry Context - The credit card overdue loans have significantly increased, with the total amount of overdue loans for more than six months reaching 1,239.64 billion yuan by the end of 2024, a 36-fold increase from 33.77 billion yuan at the end of 2008 [5]. - The average principal recovery rate for credit cards has dropped to below 6% by the end of Q1 2025, indicating a challenging environment for traditional post-loan management [1][5]. Group 3: Bank Responses - A bank credit card business leader noted that banks typically cover litigation costs upfront, but rising non-performing assets and declining recovery rates have led to increased costs, making it crucial to control overdue costs for profitability [4]. - The adjustment by China Bank is seen as a cautious pilot exploration, with few other banks following suit, indicating a unique approach within the industry [4][12]. Group 4: Future Outlook - Industry experts suggest that while the current adjustment may not lead to widespread changes across banks, it reflects a maturation in post-loan management practices [12][13]. - The overall credit card asset quality is deteriorating, with 13 banks reporting a total non-performing loan balance of 1,459 billion yuan by the end of 2024, an increase of 526 billion yuan from 2022 [6].