Credit Card Profit Pattern Research Based On Cost Income Model

Nowadays, as the internationalization trend in our country has been more and more clear and payment settlement networks has been widespread and the people's living quality has been greatly improved, credit card business in our country has been in a fast-growing stage. From year 2003 to 2008, credit card issuance has been increasing by above 60% annually. However, the surging increase can hardly cover up the embarrassing profitable situation. Until the end of year 2008, the credit card issuing banks have exceeded 30 and the total credit cards issued have exceeded 100000000. The credit cards issued by ICBC, China Merchant Bank,CBC,have all exceeded 10000000, but only a few banks including Guangdong Development Bank, China Merchant Bank and China Minsheng Bank declared that their credit card business has realized the profits and for most of the credit card issuance banks the credit card business is in the profit-lossing situation.Basically credit card business in our country has been developed based on the existing overseas experience. But considering the exploring phase of our credit card business as well as the different consuming habit and background in our country, the profitability can hardly achieve the ideal results. Because of the relatively conservative consuming habit, the rate of using circulatory loan is very low. The bank can hardly gain the interest income. Meanwhile the competition is furious in the banking sectors, the marketplace commission is far from lower than international standard, meanwhile the widespread strategy of free annual fee for using credit cards leads to the sharp decreasing for annual fee income. According to the survey organized by worldwide well-known consultative organization Mckinsey, Chinese credit card market in the whole may not make any profit until year 2013. In the background hereinbefore, analysing the profitability situation for credit card business and discuss the real profitable mode for the credit card businee in our country have the significant realistic meaning.Based on the aforesaid background and economic cost-income function, this article constructs a new cost-income model which applies to our country's credit card market. Taking the representative commercial bank as an example, the cost and income status of the credit card service has been thoroughly analyzed by using this model, with the conclusion that the direct reason why credit card market fails to profit is the commonly low income of the main profitable services and the extraordinary high marketing cost. And from the angle of the market circumstance, customer and the bank, this article also explores the ultimate cause and comes out with a suggestion to improve this situation from the point of the bank.The analyzing method this article takes, avoids confining the research in the experience of the overseas credit card market, explores the innovative studying method and thoughts. The study of this research has great value for improving this situation and founding the profit pattern compatible with our country's status.