Source: The Beijing News, ChinaScope Financial (Data)
+ China’s Central Bank has required banks to cut bank card transaction fees starting from February 25, 2013. The bank card transaction fees for retailers in food & beverage and entertainment industries may be cut by 37.5 percent, while that for other retailers may be reduced by 22 to 24 percent. As a result, China’s four major state-owned banks may lose CNY 6 billion a year from lost card transaction revenue.
+ Industry insiders said that currently, bank card fees primarily consist of transaction fees and annual fees, with the former accounting for a larger share.
+ Earlier semiannual reports show that Industrial and Commercial Bank of China (1398: HKG: 601398: SHA), Bank of China (3988: HKG; 601988: SHA), Agricultural Bank of China (1288: HKG; 601288: SHA), and China Construction Bank (0939: HKG; 601939: SHA) pulled in a combined CNY 30.04 billion from bank card fees in 12H1, of which about CNY 15 billion were derived from bank card transaction fees.
Lower card fees might be an attempt by the government to stimulate domestic consumption. Fee income accounts for an increasing share of banks’ operating income, and the lower card fees are therefore, together with Interest rate cuts, threatening to erode bank profitability.
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