21 Financial Research: When credit card bad-favor soars, when will it end?

Bad ABS quickly “enriches blood”

In order to make up for the problem of capital occupation caused by bad credit cards, banks have begun to look for ways to issue accounts other than clearing and writing off.

The securitization of non-performing assets refers to a certain combination of assets with poor liquidity by asset owners, so that this group of assets has a relatively stable cash flow, and then through improved credit, it is converted into securities that flow in the financial market. Technology and process. Using credit card non-performing loans as the basic asset is credit card non-performing asset-backed securitization.

my country’s banking industry first issued credit card non-performing asset-backed securities in 2016. In that year, the supervisory authority clearly supported and mentioned ABS products in a number of important documents or speeches. In April 2016, the Association of Dealers issued the “Guidelines for Information Disclosure of Non-performing Loan Asset-backed Securities (Draft for Solicitation of Comments)”, and selected some banks for pilot projects on non-performing loan ABS. The first institution to issue bad credit card ABS was China Merchants Bank, with a total issuance of 233 million yuan.

Judging from the situation in the first three quarters of this year, the largest single credit card non-performing ABS was the “Jianxin 2020 Phase 4 Non-performing Asset Backed Securities” issued by China Construction Bank in September this year, with an issue amount of 472 million yuan; followed by Bank of Communications in In the same month, “Jiaocheng 2020 First Phase of Distressed Asset-backed Securities” was issued with an amount of 450 million yuan; the single larger amount was also “Huiyuan 2020 First Phase of Distressed Asset-backed Securities” issued by China CITIC Bank in April. , Is 410 million yuan.

China Merchants Bank and Shanghai Pudong Development Bank have issued four issues with higher frequency. China Merchants Bank issued four phases of “CMB Hecui” series of ABS, with a total amount of 533.8 million yuan. Shanghai Pudong Development Bank issued four phases of “Puxin Guihang” series of ABS with a total amount of 624.7 million yuan. In addition, China Construction Bank issued two issues this year, totaling 844 million yuan; Industrial and Commercial Bank also issued two issues this year, totaling 715 million yuan.

Overall, in the first three quarters of this year, bad credit card ABS has issued more than 4.5 billion yuan, and last year was 5.7 billion yuan. The issuance volume in the first three quarters of this year has reached 80% of last year’s full year, showing the characteristics of accelerated issuance.

Although the transfer of non-performing credit cards to off-balance sheet is relatively active, as China Chengxin said in the 2020 first phase of non-performing asset-backed securities credit rating report on Rural Profit Credit, there are three points that need attention:

1. The recovery of a single debt is uncertain. Transaction cash flow mainly depends on the future disposal of non-performing assets into the pool. This transaction enters the pool

The assets are credit card bad debts, there are no guarantee measures such as mortgage or pledge, and the recovery of single bad debts is uncertain. In addition, the collection and disposal process of non-performing assets is complex and changeable, and the disposal results are susceptible to systemic risks and accidental factors. Therefore, the future cash flow recovery is uncertain. Especially in the context of the slowdown in macroeconomic growth in recent years and the tightening of financial supervision, the collection environment of credit card accounts receivable has gradually deteriorated, the non-performing rate has increased, and the difficulty of disposing of non-performing assets has increased. The disposal value and disposal time are to a certain extent All are adversely affected, or will have a certain impact on the timely and full repayment of the principal and interest of the preferred securities.

2. Model risk. The underlying assets of the transaction are non-performing credit card loans. There are many factors that affect the disposal and recovery of non-performing loans. The mathematical methods and related assumptions used in the quantitative analysis may have certain model risks.

3. The new crown pneumonia epidemic may increase the risk of recovery. The continuous escalation of the epidemic will have a certain impact on service industries such as transportation, tourism, catering and commerce, and will have a certain impact on the domestic economy in the short term, or will increase the difficulty of recovering non-performing assets.

Supervision is alert to credit card risks

Supervision has also noticed the rising risk of bad credit cards and issued warnings on multiple occasions.

On June 24, the China Banking and Insurance Regulatory Commission mentioned in the “Notice on Carrying out the “Looking Back” Work on Remediation of Market Disorders in the Banking and Insurance Industry” that credit card business inflated customer solvency or violated the “rigid deduction” regulations, breaking through The upper limit of the total credit line is controlled; the cash advance business line is set too high, does not meet the requirements of prudent management, the use of funds is not well controlled, and it flows to non-consumption areas in violation of regulations.

Only 5 days later, on June 29, the Consumer Insurance Bureau of the China Banking and Insurance Regulatory Commission pointed out in the “Consumption Tips on the Reasonable Use of Credit Cards” that some consumers over-relied on credit card overdraft consumption and were burdened with large credit card loans beyond their ability to repay. , And even fall into the situation of “repaying a loan with a loan” and “raising a card with a card”, leading to problems such as tight funds and double repayment pressure. Consumers should correctly understand the functions of credit cards, spend rationally overdrafts, do not “repay the loan with a card” or “long-term use”, and rationally use the consumption support role of credit cards and other consumer loan tools.

In recent months, a number of banks including GF, Ping An, CITIC, Bank of China, Agricultural Bank of China, China Asset Management, and Industrial Development have successively issued the “Announcement on Further Clarifying the Use of Credit Card Funds.” It is stipulated that cardholders shall not maliciously extract bank funds, points and rights through informal transaction channels or other means, and clearly restrict the use of credit cards. If cardholders do not regulate the use of the card, the bank may terminate all functions.

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