China Construction Bank, one of the country's four largest State-owned commercial banks, said yesterday it issued 22.78 million new banking cards during the first nine months of this year, bringing its total number of cards in circulation to 144.06 million.

During the January-September period, the bank earned 703 million yuan (US$84.7 million) from the bank card business, an increase of 236 million yuan (US$28.4 million) from a year ago.

The bank has focused on expanding its card business since the beginning of this year, a spokesman said, adding that a number of card centers were established across the country to provide better services to customers.

Huang Jinlao, a senior researcher with the International Financial Institute, said the mass market represents an important segment for domestic banks because it is a new growth area of profits.

"Competition for bank card business, mainly the credit card business, will intensify in the coming years now that China has become a member of the World Trade Organization (WTO)," Huang said.

Overseas banks such as Citibank, Hong Kong and Shanghai Banking Corporation Ltd, and Standard Chartered are all poised to enter the market.

"They are now waiting for a revised bank card management regulation which will allow overseas banks to issue cards to domestic individuals," he said.

An official with the China Banking Regulatory Commission said the new regulation will likely take effect before the end of the year.

Huang said foreign banks will be freed from all geographical and customer restrictions in China by the end of 2006, in accordance with China's commitment to the WTO.

"Overseas banks, which enjoy global networks and technological advantages, could pose a considerable threat to domestic banks in retail banking," he said.

Wang Zhao from the Development Research Center said the bank card business is one of the most profitable segments in the industry because it can help increase revenues through annual fees, high interest rates and commissions paid by merchants to card issuers.

"Domestic banks should try to secure their foothold in the market," Wang said.

Figures from the central People's Bank of China indicate that by the end of last year 88 domestic banks had issued about 500 million cards - a 30 percent increase over figures for 2001.

(China Daily October 24, 2003)