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Credit and Loan Products - China - July 2016

Published By :

Mintel

Published Date : Jul 2016

Category :

Banking

No. of Pages : N/A

How credit and loan products could be designed and operated is more influenced by regulators than providers. In China, benefiting from the Inclusive Finance policy, internet finance players like peer-to-peer lending firms, internet-based banks and equity crowdfunding platforms are thriving. Consumers are enjoying the convenience resulting from the competition between these operators and traditional banks. Failures should be noticed, but they should not be overemphasised. With more proper regulations, the household loan market is expected to continue to grow with more responsible firms and innovative products.

Table of Content

Overview

What you need to know
Covered in this report
Excluded
Figure 1: Definition of low/mid/high MHI groups, by city tier

Executive Summary

The market
Figure 2: Total loans to households, 2011-21
Figure 3: Percentage of GDP accounted for by total household loans, 2011-16
Figure 4: Amount outstanding on consumer loans, by short term and long term, 2007-16
Figure 5: Amount outstanding on operations loans, by short-term and long-term, 2007-16
Companies and brands
Figure 6: Market share of total loans to households, 2011-15
Figure 7: Market share of outstanding credit loans, 2014-15
The consumer
Figure 8: Usage of credit and loan products, 2016 vs 2014
Figure 9: Purpose for using credit or loan products, April 2016
Figure 10: Selected credit card application channel, by monthly personal income, April 2016
Figure 11: Important factors for choosing credit card, April 2016
Figure 12: Usage habit and attitude towards credit card, by gender, April 2016
Figure 13: Perception of different loan providers, April 2016
What we think

Issues and Insights

What could be learnt from internet-based financial players?
The facts
The implications
Is the penetration of credit cards coming to an end?
The facts
The implications
How to attract young adults to apply for loans?
The facts
The implications

The Market – What You Need to Know

Household loans will continue to grow as a total…
…yet different sectors meet different conditions
Innovative products drive the market

Market Size and Forecast

Loans to households continues to grow
Figure 14: Total outstanding loans to households, 2011-21
Figure 15: Total household loans as a percentage of GDP, 2011-16
Figure 16: Total loans to households, as a percentage of GDP, by nation, 2011-15
Fast growing consumer loan sector
Figure 17: Outstanding balance on consumer loans, 2011-21
Figure 18: Amount outstanding on consumer loans, by short term and long term, 2007-16
Stagnant operation loan sector
Figure 19: Balance outstanding on operation loans, 2011-21
Figure 20: Amount outstanding on operations loans, by short term and long term, 2007-16

Market Factors

Interest rate liberalisation
Consumer spending attitude
Usage of credit cards
Figure 21: Number of banks in China with over RMB 100 million revenue in credit card business, 2011-15
Increasing mortgages
Figure 22: volume and the average price of traded commercial residential apartments, 2011-15
Peer-to-peer lending
Private banks and internet-based banking
Figure 23: Details of first five private banks in China
Deleveraging

Key Players – What You Need to Know

Traditional banks are facing intense competition
Internet financing
More regulation and entrants can be expected

Market Share

Big Four rule the loans to households market
Figure 24: Market share of total loans to households, 2011-15
Best performing credit card issuer is China Merchants Bank
Figure 25: Market share of outstanding credit loans, 2014-15
Figure 26: NPL ratio of leading banks, 2014-15

Competitive Strategies

Customised credit cards
Premium cards
Co-branded credit cards
Specialised loan products by P2P firms
Leveraging the power of big data

Who’s Innovating?

Promote products by usage occasions
Instalments for everything
Targeting college students
Equity crowdfunding
Third-party credit verification

The Consumer – What You Need to Know

Consumers increasingly using loans
Credit cards encounter promotional issues
Diversified usage attitudes towards credit cards
P2Ps are gaining ground

Usage of Credit and Loan Products

Internet pay-by-credit service becomes No.2 loan type, after credit card
Figure 27: Usage of credit and loan products, April 2016
Men take out more loans
Figure 28: Usage of credit and loan products, by gender, April 2016
Credit card penetration skews towards younger consumers
Figure 29: Usage of credit card, by age and gender, April 2016
Young adults are fans of Internet pay-by-credit services
Figure 30: Usage of internet pay-by-credit service, by age and gender, April 2016
25-39-year-olds are in need of loans the most
Figure 31: Usage of any type of loan, by age group, April 2016
High earners are willing to try new loan types
Figure 32: Usage of credit and loan products, by monthly household income, April 2016

Reasons for Using Credit and Loan Products

Closer to daily life
Figure 33: Purpose of using credit or loan products, April 2016
Different products for different purposes
Figure 34: Purpose of using credit or loan products, by product type, April 2016
Penetration by usage occasion
Figure 35: Top choices for different purposes, April 2016
Ever demanding young adults
Figure 36: Purpose of using credit and loan products, by age group, April 2016
Figure 37: Purpose of using credit or loan products among 20-24s, by product type, April 2016
Broad loan needs of middle-low income groups
Figure 38: Purpose of using credit or loan products, by monthly household income, April 2016

Credit Card Application Channel

About half go to bank branches
Figure 39: Credit card application channels, April 2016
Different approaches by different age groups
Figure 40: Selected credit card application channels, by gender and age, April 2016
Lack of promotional accuracy by card issuers
Figure 41: Selected credit card application channel, by monthly personal income, April 2016
Figure 41: Selected credit card application channel, by monthly personal income, April 2016 (continued)

Important Factors for Choosing Credit Card

Practical needs first
Figure 42: Factors for choosing credit card, April 2016
Different attitudes towards card fees
Figure 43: Factors for choosing credit cards, by age, percentage choosing ‘very important’, April 2016
Application channels as filters
Figure 44: Factors for choosing credit card, by application channels, mean average of importance, April 2016

Usage Habits and Attitudes towards Credit Cards

High familiarity with credit cards
Figure 45: Usage habits and attitudes towards credit cards, April 2016
Males are heavier credit card users in general
Figure 46: Usage habits and attitudes towards credit cards, by gender, April 2016
Carry out more salesmen promotions
Figure 47: Usage habit and attitude towards credit cards, by application channel, April 2016

Perceptions of Different Loan Providers

Peer-to-peer loans are gaining ground
Figure 48: Perception of different loan providers, April 2016

Meet the Mintropolitans

Rely on financial products more than personal connections
Figure 49: Usage of credit and loan products, by consumer classification, April 2016
Credit cards as a borrowing tool, rather than a payment tool …
Figure 50: Purpose of using credit cards, by consumer classification, April 2016
…so higher credit limit is important
Figure 51: Factors for choosing credit card, percentage choosing ‘very important’, by consumer classification, April 2016

Appendix – Market Size and Forecast

Figure 52: Total loans to households, 2011-21

Appendix – Market Segmentation

Figure 53: Balances outstanding on consumer loans, 2011-21
Figure 54: Balances outstanding on operation loans, 2011-21

Appendix – Methodology and Abbreviations

Methodology
Fan chart forecast
Abbreviations

List of Table

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