Study On The Factors Affecting The Profitability Of Credit Card Business Of China Merchants Bank

In recent years,with the rapid development of the economy and increase of China's household consumption level, credit card gradually has become an important way of individual consumption loan. According to statistics,the transaction amount of credit card totalled Y 1.52 billion in 2014,accounting for 58% of retail sales of social consumer goods.Owing to the great revenue of credit card consumption,credit card has gradually become one of the most profitable retail business.China Merchants Bank credit card business as a leader in our country, and in the development of more than ten years, CMB's business of credit card has gained comparatively strong anti-risk capability and steadily growing profitability. But there are still some hinders restricting the enhancement of profitability. It is still inadequate in developing credit card clients and popularizing the related knowledge.Besides, there are many credit cards not applied into real use.Faced with fierce competition in the credit card market and the existing problems, What should CMB do for a further increase of its profitability and healthy and quick development of its credit cards business?This paper briefly introduces the basic condition of CMB's credit card business at first and then makes a chronological analysis and a comparative ananysis with main state-owned banks and stock-holding banks in terms of its profitability so as to find out the drawbacks of current credit card business and the causes. Based on it, this paper discusses about the possible factors that might have influence on profitability of CMB's credit card. Adherenting to a certain principle, this eassy chooses to analysize the possible factors with eight indexes from macro, meso and micro economics and calculates with the aid of Matlab the correlation between the profitability of CMB's credit card from 2006 to 2015 and the aforementioned indexes. This empirical anysis turns out the most essential factors in this period are urban disposable income and Gross Domestic Products. This result has something to do with the features of credit card itself since the concept and habit of excessive consumption require considerably prosperous economy and high income. The number of CMB-issued credit card is the second most influential factor, because during that period CMB's credit card was at the beginning of development and effective expansion and increase in market share are essential to making profits from credit card business. Compared with overdraft balance, the sum of transaction and the number of special merchants exert greater influence over the profitability of CMB's credit card. This result is related to CMB's profit model of non-interest income dominance.In the end, this paper comes up with some proposals for improving the profitability of CMB's credit card, including enhancing the credit consumption willingness through publicity, issuing co-branded card, seeking for group of excessive consumption and maintain revenue by improving anti-risk management capacity.