Tue, Nov 11, 2003 - Page 10 News List

Citibank plans to capture youth market

By Amber Chung  /  STAFF REPORTER

The relaunching of its "clear card" along with the new "clear mini card" yesterday underlines Citibank NA's effort to boost its credit-card business here, officials with the world's largest credit-card issuer said yesterday at a press conference.

In terms of sales, Citibank said it has seized 10.7 percent of Taiwan's credit card market, with 1.85 million cards in circulation. Chinatrust Commercial Bank (中國信託銀行) currently dominates the industry with 5.5 million cards in circulation, according to the lender.

"Our reformulated strategy in Taiwan's credit card market is to define a clear market segment and enhance the practical benefits credit cards bring to our customers," said Victor Kuan (管國霖), Country Business Manager of Consumer Bank, Citibank Taiwan.

Citibank said it would target the younger generation this time and believes what really counts for the business is spending per card, instead of the number of cards issued.

"Each Citibank credit card can create monthly spending of around NT$6,200, around twice compared with other banks," said Shariq Mukhtar, Citibank's vice president and also its credit-card business director.

The relaunched clear card is targeted at young professionals ranging from 25 years old to 35 years old, Mukhtar said.

"We grabbed around 11 percent of the market share in this youth segment. We plan to boost the ratio to 25 percent to 30 percent and the number of cards up to 500,000 in the next two years," he said.

Citibank first launched its clear card in July last year and has seen the number grow to more than 200,000.

The company said there is still room for growth, and one analyst agreed.

"Credit cards are the main force behind the consumer-banking sector. Along with the changing consumption habits of the Taiwanese, who are turning to the use of credit cards, there is a great chance for the credit-card business to develop in Taiwan's consumer banking sector," said William Fong (方偉昌), a finance industry analyst at Primasia Securities Co.

Fong indicated that the overdue loan ratio of Taiwan's credit card users is about 3 to 4 percent, while that in other Asian countries including South Korea and Hong Kong is more than 10 percent.

"With interest rates as high as 20 percent, banks still have wide margins for profits created from credit cards," Fong added.

"Compared with cash-advance cards, credit cards are a rather safe product, as the overdue loan ratio of cash cards will explode faster than that of credit cards when the economy turns sluggish," Fong said.

Fong said this is why Fubon Bank (富邦銀行), which has around 2.2 million cards in circulation, still focuses on the credit-card business instead of plunging itself into the booming cash-advance card business.

Around 20 percent of Fubon's annual turnover comes from credit cards, Fong added.

Fong doubted that Citibank's launch of a clear mini-card would help boost the credit card business effectively.

"Since mini-cards cannot be widely used in many shops and Automatic Teller Machines, owing to the restrictions of technical support, it might be a question mark on the effectiveness of mini-cards to expand Citibank's credit card customers," Fong said.

Union Bank of Taiwan (聯邦銀行) is the nation's first bank to issue a mini-card earlier this year, followed by Chinatrust. In October, UniBank's mini card issue number reached more than 30,000 while Chinatrust's mini cards totalled more than 40,000.

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