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China Retail Banking: Opportunities and Risks to 2023

October 2019 | 40 pages | ID: CD9E5079536CEN
GlobalData

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China Retail Banking: Opportunities and Risks to 2023

SUMMARY

China’s total loan balances outstanding (including credit card balances, personal loan balances, and residential mortgage balances outstanding) recorded a compound annual growth rate (CAGR) of 25.2% during 2014-18 to reach CNY37.8tn ($5.5tn). Credit card balances outstanding was the fastest-growing credit segment during the review period. However, as a result of stringent government regulations aimed at curbing rising household debt, total loan balances outstanding is expected to record a slower CAGR of 13.7% over 2019-23.

Based on our proprietary datasets, this report analyzes China’s lending market, with a focus on the consumer lending segment. The report discusses in detail the credit card, personal loan, and mortgage loan markets, covering market size, competitors’ market shares, and survey insights. The report also provides a market overview of the retail deposit segment. In addition, it covers the key digital disruptors in the country’s retail lending segment.

SCOPE
  • Credit card balances outstanding in China recorded a high CAGR of 30.8% during 2014-18. To curb rising credit card debt, Chinese regulators are tightening lending criteria.
  • The personal loan market in China recorded a CAGR of 20.9%, with banks being the preferred lender for personal loans.
  • Residential mortgage loans in China increased at a significant CAGR of 24.8%, mainly due to high housing prices.
REASONS TO BUY
  • Make strategic decisions using top-level historic and forecast data on China’s retail lending industry.
  • Identify the most promising lending segments.
  • Receive detailed insights into lending in China, including consumer lending.
  • Understand the changing market and competitive dynamics by learning about new competitors and recent deals in the retail lending space.
  • Receive comprehensive coverage of the retail deposit market in China.
Market Overview
Macroeconomic Overview
Consumer Lending: Mortgage Loans
Consumer Lending: Personal Loans
Consumer Lending: Credit Card Loans
Retail Deposits
Digital Disruptors
Recent Deals
Appendix

COMPANIES MENTIONED

China Construction Bank
ICBC
Agricultural Bank of China
Bank of China
Bank of Communications
China Merchants Bank
China Citic Bank
Shanghai Pudong Development Bank
China Everbright Bank
China Minsheng Bank
HSBC (China)
Citibank (China)
Yongqianbao
QuantGroup
Yirendai
Zhejiang Zhongfeng Investment Management
Urumqi Fenghui Direct Lending
Central Huijin Investment
Hengfeng Bank
Cinda Investment
China Great Wall Asset Management
ICBC Financial Assets Investment
Bank of Jinzhou
JD Digits
Bertelsmann Asia Investments
Tencent Holdings
Linkfin Technology
Shenergy Group
United Overseas Bank

China’s retail lending market, which registered strong growth during 2014–18, will continue to lead the Asian retail lending market with a compound annual growth rate (CAGR) of 13.7% during 2019–23, says GlobalData.

According to GlobalData’s report, China Retail Banking: Opportunities and Risks to 2023, China’s total loan balances outstanding recorded a CAGR of 25.2% from CNY15.4 trillion (US$2.2 trillion) in 2014 to CNY37.8 trillion (US$5.5 trillion) in 2018. The majority of Chinese loan balances outstanding were from home loans, followed by credit card and personal loans.

Ravi Sharma, Senior Analyst at GlobalData, comments: “The availability of easy loan acquisition facilities for even subprime borrowers, coupled with the proliferation of non-bank lenders providing same-day loan approvals and unsecured loans at competitive interest rates, resulted in the rapid increase in household debt between 2014 and 2018.”

Mortgage loans remain the largest category as they increased significantly during 2014–18, recording a CAGR of 24.8%.

Sharma continues: “The Chinese mortgage market has been characterized by growing house prices since 2015. This was further fueled by the relaxation of property investment restrictions, including lower down payment ratios, interest rates and collateral requirements.”

Mortgage loans are followed by credit card balances, which are driven by rising domestic consumption and growing demand for consumer credit (especially among the middle class population).

In addition, China’s gross savings rate stood at 45.7% in December 2018 – one of the highest savings rates in the world – reflecting Chinese consumers’ preference to save rather than spend. This, coupled with a global equity market downturn, led the Chinese retail deposit market to post a healthy CAGR of 9% during the review period.

The trend is expected to continue on account of anticipated economic uncertainty and ongoing trade disputes with the US.



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