Salient to Investors:

China is the world’s fastest-growing market for credit cards, even as delinquencies have tripled in the past 4 years and profit remains elusive. Debit cards outnumber credit cards 10-to-1 in China.

Rainy Yuan at Masterlink Securities said credit cards are the ultimate growth area and also the battlefield for banks in China.

China’s $7 trillion in household savings is more than the combined GDP of Germany and Brazil.

Richard Huang at Boston Consulting said 3 percent to 8 percent of cardholders in China roll over their balances generating interest charges versus 40 percent in the US. Huang said people may have concerns over the course of China’s credit-market development, but the growth potential makes all of them trivial.

Stanley Li at Mirae Asset Securities HK said foreign banks lack the scale to reach out to retail customers, so it is better for them to run the credit-card business with China’s major local banks.

The World Bank estimates China will slow to 7 percent growth by 2016 and 5.9 percent in 2021 assuming steady reforms and no major shock.

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