HSBC is pulling back from its credit card business in China, nearly eight years after its launch, as the bank faces challenges in growing and making the operation profitable.
The London-based bank has ceased issuing new cards and is working to wind down its credit card services for many of its onshore customers in China, according to sources familiar with the matter.
The decision follows unsuccessful attempts to sell the business, sources revealed. However, HSBC may continue offering credit card services to a select group of high-end clients, particularly through its Premier and Global Private Banking services, which focus on international travel and lifestyle features.
HSBC’s foray into the Chinese credit card market began in late 2016, as part of its broader strategy to expand its retail banking and wealth management operations in Asia. By September 2019, the bank had approximately one million credit card users in China. Despite an initial surge, which saw the business reach $500 million in outstanding balances within 18 months, growth soon stalled due to the COVID-19 pandemic, which led to strict lockdowns and a reduction in consumer spending. In recent years, China’s economic slowdown has further dampened the credit card market, with total card issuance declining from a peak of 800 million in 2021 to 767 million in 2023, according to data from Insight & Info Consulting.
Alongside this market slowdown, HSBC faced stiff competition from domestic banks and digital platforms offering consumer loan services at lower costs. Additionally, regulatory restrictions around interest rate pricing and dealing with defaults added to the challenges the bank encountered. These factors, combined with high client acquisition costs and increasing instances of fraud, contributed to the difficulty of maintaining a profitable credit card business in China.
While HSBC’s credit card business in China has remained relatively small in comparison to its global operations, the pullback underscores the broader challenges global banks face in expanding their presence in the world’s second-largest economy. HSBC’s credit card segment in China accounted for just 1% of the bank’s global credit card business in 2023, down from around 2.5% in 2019.
The decision also aligns with a larger restructuring effort at HSBC, which is focused on cutting costs and improving operational efficiency under newly appointed CEO Georges Elhedery. As part of this restructuring, HSBC is reviewing its business lines and geographical focus, including its digital wealth business in China.
