Consumer lending slows further but remains robust
Consumer lending slows further in line with a decelerating local economy and uncertain global outlook. However, overall consumer lending retained its robust double-digit growth pace in 2013, supported by the strong market demand for mortgages/housing and card lending. On the other hand, other consumer lending categories, such as auto lending and home lending, continue to register a strong growth momentum, boosted by consumers’ growing acceptance of credit consumption and the rising pursuit of personal wellbeing.
Mortgages/housing remains dominant in the market
Mortgages/housing has taken the lion’s share of total consumer lending in China over the review period, owing to the explosive development of the housing market. To curb speculation and prevent the bubble bursting, relevant authorities have introduced a series of measures, including increased down payments and housing loan rates to buyers of second homes and no loan at all to buyers of third properties. As a result, mortgages/housing has experienced decelerating value growth over the review period, but still remains dominant in total consumer lending in 2013, thanks to the strong market demand from newly-weds and ongoing urbanisation.
Non-banking institutions are strong in innovative new launches
Apart from banks, other non-banking institutions are also active in launching innovative consumer credit products. Alibaba Financial Co Ltd trial launched credit payment service to AliPay users who make online purchases on the online shopping platforms under Alibaba Group via their mobile phones and tablets. The automatically-granted consumer credit to AliPay users, ranging from RMB200 to RMB5,000, based on their age, job and online transaction records, makes it easier for mobile transactions, a move that is likely to be followed by other third party payment service providers in China over the forecast period.
Supporting rules and regulations to promote consumer lending
The State Council’s green light to the reduced card transaction fee since February 2013, proposed by People’s Bank of China, has resulted in a positive impact on card lending, which experienced the most robust value growth in outstanding balance in the same year, in addition to its relatively small consumer base as compared to non-card lending. On the other hand, Chinese consumers are more open to consumer credit, in line with their rising product awareness and increasing personal wealth.
Consumer lending to maintain steady forecast growth
Consumer lending is expected to maintain steady forecast value CAGRs in both outstanding balance and gross lending over the forecast period, to be underpinned by the steady market demand for consumer credit, particularly card lending. Dominant mortgages/housing is expected to record a declining percentage of total consumer lending value sales over the forecast period, following strict control of the housing market to prevent further bubbles.
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The Consumer Lending in China market research report includes:
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