Analysis Of Cost-income Of Foreign Banks’ Card Business

As China being the member of WTO, foreign banks were permitted to invest in China bank industry ever since 2006. Bank card is a basic item of foreign banks’ retail banking business. However, some foreign banks who involved in card business met the same problems, such as limited market share, income not match the cost and insufficient follow-up investment on card business. Therefore, some good card business development experience practiced in overseas market hasn’t been operated in China. Practically, it’s important to evaluate the cost-income issue of card business, especially from the view of foreign banks.Initially, general situation of China bank card industry is present. Card business includes two aspects, card issuance and acquiring business. At the second stage, card issuance divides into two parts, debit card and credit card. And acquiring business includes ATM acquiring and special merchants acquiring. Taking the short-term as assumption, cost issue composes of fix cost and variable cost. Regarding the income issue, the comprehensive evaluation is composed with direct income and indirect income.Being different from the fully development of China banks, foreign banks almost stay at the stage of debit card issuance and ATM acquiring. We take the performance of foreign banks as example to analyze their cost-income issue. In that way, we can conclude the cost and income of foreign banks’ can’t match. Therefore there is no motivation of them to invest in card business continuously or launch new sub-business. Meanwhile, we compare the card business of foreign banks with local banks to see the advantage and disadvantage of them separately.To make the foreign banks well adapt to the China market environment and contribute more strategy on card business, the good ideas of card business promotion both domestic and overseas will be listed in the paper. In the end, the author raises the suggestion on foreign banks’ card business.