Core Insights - The credit card market in China is experiencing a significant contraction, with a total issuance of 707 million cards as of Q3 2025, down from 715 million in Q2 2025 and a peak of 807 million in Q3 2022, marking a decline of approximately 100 million cards over three years [2][3] - The non-performing loan (NPL) rate for credit cards has risen to 2.40% as of mid-2025, indicating increasing pressure on asset quality within the banking sector [5][6] Credit Card Issuance Trends - The total number of credit cards has been on a downward trend for 12 consecutive quarters, with a notable reduction of 800 million cards in Q3 2025 compared to the previous quarter [2] - Major banks have reported a significant decrease in credit card loan balances, with a reduction of nearly 600 billion yuan in the first half of 2025 compared to the end of 2024 [3] - Credit card transaction volumes have also declined, with an overall decrease of approximately 8% year-on-year, particularly affecting banks like China Merchants Bank and Bank of Communications [3] Factors Influencing Market Contraction - The contraction in the credit card market is attributed to multiple factors, including regulatory policies that encourage banks to move away from aggressive card issuance and the rise of mobile payments and internet credit tools that are replacing traditional credit card usage [4] - Banks are shifting their focus from merely expanding card issuance to more refined management and risk control strategies [4] Asset Quality Concerns - The total amount of overdue credit card loans has increased from 842.85 billion yuan in Q2 2022 to 1,239.64 billion yuan by the end of 2024, indicating a growing concern over asset quality [5] - The average NPL rate for credit card overdrafts among 12 domestic banks has risen from 2.33% at the end of 2024 to 2.40% by mid-2025, with specific banks like ICBC and CCB reporting even higher rates [5] Risk Management and Asset Disposal - In response to rising NPLs, banks are accelerating the disposal of non-performing assets, with over 260 billion yuan in personal loan asset packages being transferred in November alone [6] - Notable cases include large asset packages from banks like Minsheng Bank and SPDB, indicating a proactive approach to managing credit risk [6] Operational Adjustments in Banking - Banks are implementing cost-cutting measures, including the closure of credit card centers and integrating credit card operations into broader retail banking strategies [7] - The future of credit card services is expected to focus on providing safer and more value-added financial services rather than merely promoting overspending [7] - The competitive landscape is likely to favor larger banks with strong risk management capabilities, while smaller banks will need to find ways to attract and retain customers without compromising on risk [7]

Core Insights - The credit card business in China is facing challenges, with a notable decline in transaction volumes and an increase in non-performing loans, despite some banks like China Construction Bank achieving significant growth in credit card loan balances [1][4][8]. Group 1: Credit Card Loan Balances - China Construction Bank (CCB) has become the first bank in the country to surpass 1 trillion yuan in credit card loans, reaching 1.07 trillion yuan in 2024, an increase of 688 billion yuan from the end of 2023 [2][3]. - Agricultural Bank of China (ABC) showed the most significant growth in credit card loans, increasing by 1.587 billion yuan, with its share in personal loans rising from 8.67% to 9.73% [3]. - Ping An Bank experienced a substantial reduction in credit card loans, with a balance of 435 billion yuan, down 791 billion yuan year-on-year, leading to a decrease in its share of personal loans from 25.99% to 24.62% [3]. Group 2: Asset Quality and Non-Performing Loans - The overall asset quality of credit card loans has deteriorated, with banks like Changshu Bank and Chongqing Bank reporting significant increases in non-performing loan ratios, rising to 4.14% and 3.04% respectively [4][5]. - The total amount of overdue credit card loans reached 123.964 billion yuan by the end of 2024, marking a year-on-year increase of 26.32% [5]. Group 3: Market Trends and Consumer Behavior - The total number of credit cards in circulation has decreased significantly, dropping from 807 million in mid-2022 to 727 million by the end of 2024, a reduction of 80 million cards [8]. - Credit card transaction volumes have also declined, with major banks like China Merchants Bank and Ping An Bank reporting decreases in credit card spending of approximately 390 billion yuan and 460 billion yuan respectively [8][10]. - The shift towards consumer loans is evident, with several banks reporting an increase in the proportion of consumer loans within their personal loan portfolios, indicating a strategic pivot in response to market conditions [11][12]. Group 4: Strategic Adjustments by Banks - Some banks are restructuring their credit card operations, with China Merchants Bank and Ping An Bank focusing on high-quality customer acquisition and adjusting their credit card issuance strategies [8][10]. - Traffic Bank is transitioning to a localized management model for its credit card business, aiming to provide integrated financial services to better meet customer needs [10].