A study on the portfolio management of credit risk management for credit cards business

• Main Authors: Yang, I An, 楊一仁
• Other Authors: 王儷玲
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/43030119458770773592

碩士 === 國立政治大學 === 經營管理碩士學程(EMBA) === 100 === A local credit crisis occurred in Taiwan from late 2005 to early 2007. During the crisis, the total credit losses of Credit Cards and Cash Card were NT$ 162.9 billion for all cards issuers in Taiwan for Year 2006. This big loss made the Taiwanese banks having a negative net-income at NT$7.4billion for Year 2006. The root cause was from ignoring the credit risk management while Taiwanese banks kept growing the consumer lending business. And finally a few local banks were sold to the foreign banks because they couldn’t take such big loss from the capital requirement. The primary objective of this thesis is to research the portfolio management on the credit card business to find out how to build a good portfolio management working model in terms of credit risk management to help the credit card issuers to reduce the credit losses and increase the net-income, and also minimize the impact when the credit crisis happens. It has been proven that the credit card issuer with an excellent portfolio management on credit risk can reduce the credit loss increase compared with the others when the credit crisis is coming. For instance, the overall Taiwanese bank’s average loss rate in 2006 increased by 12.41% over 2005 but the bank loss rate only increased by 9.04% during that local credit crisis. Considering the lower operating cost of the bank, the ROA difference will be around 5%. Therefore, if any bank would like to do the consumer lending business, they must understand what risk management methods they should have and really work on them, especially for the portfolio management, so that they can maintain a good position to compete with the others.