Foreign banks may not profit in China for a decade, says KPMG

Intense competition in China could prevent foreign banks from profiting from their investments in credit card and mortgage ventures for another 10 years, according to a KPMG report.
More than 70 overseas banks now operate in China, having invested billions of dollars in the sector over the past five years. Several have raised expectations that local joint ventures would deliver early returns.
However, the report, partly based on a survey of foreign and local banking executives, suggests that executives are becoming increasingly bearish about the prospects of making profits from their operating ventures in the short-to-medium term, though many have earned handsome paper profits from equity stakes in state-owned banks that have listed in Hong Kong or Shanghai.

Simon Gleave, KPMG financial services partner for China and Hong Kong, said: “There is a culture of no fees. It could take 10 to 20 years to make profits. China is not the same as other markets that banks might have come across.”
Citigroup, Royal Bank of Scotland and HSBC are among the overseas banks to have launched co-branded cards with local banks, while rivals such as Bank of America and Deutsche Bank are waiting to launch.
Card transactions in China have risen massively in recent years but the growth has largely been via debit cards, 700m of which are now in circulation. China's 1.3bn consumers have a cultural aversion to revolving credit, as well as $2,000bn in personal savings to fund purchases.
The report says: “Average merchant fees are about 60 basis points, meaning little profit for [credit card] issuers.” It offers an equally pessimistic outlook for the mortgage sector with industry players “worried that intense competition will hit profits”.
Overseas executives also accept that it will be tough to win market share from established former state-owned lenders, who boast a combined 75,000 branches nationwide.
KMPG suggests that foreign lenders adopt a “steady and prudent” entry into developed [mortgage] markets such as Beijing and Shanghai, “though fears of a property bubble are never too far from a banker's thoughts”.
The report says that overseas lenders need to find creative distribution channels, such as mobile phone banking or partnerships with large insurance companies .

外资银行在华难赚快钱

毕马威(KPMG)的一份调查报告称，尽管在华外资银行在信用卡和抵押贷款业务方面投下巨资，但在今后十年之内，激烈的竞争可能使他们无法从中赢利。
目前有70多家海外银行在中国开展业务，过去5年向该领域的投资达数十亿美元。已有几家银行预计，在中国的合资企业将提前取得回报。
然而，毕马威对在华外资银行和中国本土银行管理人士进行调查后作出的这份报告显示，高管人士对现有合资企业的中短期盈利前景越来越悲观，尽管许多企业因持有香港或上海上市国有银行的股权已获得可观的账面利润。

毕马威中国和香港金融服务合伙人李世民(Simon Gleave)表示：“这里有一种‘免费'文化。可能需要10至20年的时间才能赢利。中国不同于各家银行碰遇到的其它市场。”
花旗集团(Citigroup)、苏格兰皇家银行(Royal Bank of Scotland)和汇丰(HSBC)等海外银行已经与当地银行推出了联名卡，而美国银行(Bank of America)和德意志银行(Deutsche Bank)等竞争对手正等着推出这种卡。
近年来，中国的刷卡交易量大幅上升，但主要是通过目前已发行的7亿张借记卡实现的。中国的13亿消费者对赊账存在文化上的反感，而且他们有2万亿美元的个人储蓄来支付购买费用。
报告称：“平均收单费率约为60个基点，这意味着（信用卡）发行机构者只有微薄的利润。”该报告对抵押贷款领域的前景持同样悲观的看法，业内人士“担心激烈的竞争将影响利润”。
海外高管人士还承认，从业务成熟的前国有银行手中夺取市场份额将是一项艰巨的任务。这些国有银行自诩在全国共拥有7.5万家分支机构。
毕马威认为，外资银行采用了一种“稳健”的方式进入北京、上海等发达的（抵押贷款）市场，“但对房地产泡沫的担忧从来都萦绕在银行家的脑海中”。
报告称，海外银行需要寻找创造性的发行渠道，如开展手机银行业务或与大型保险公司合作。