China's Banking Sector Faces Growing Debt Stress As Credit Card Defaults Rise Among Borrowers Aged 40 To 50

New Delhi, Oct 26: Chinese banks are facing a surge in credit card defaults from middle-aged borrowers who otherwise look like model citizens, with university educations and secure public-sector jobs, according to a report.

There was a close to 50 per cent jump during the last quarter in the value of non-performing loans registered on the Banking Credit Assets Registration and Circulation Centre – China’s official platform where banks and consumer finance firms list and trade non-performing debt portfolios. The value of newly registered bad-loan portfolios reached 148.1 billion yuan ($22.2 billion) in the third quarter of 2026, including principal and interest. Credit card arrears accounted for 35.2 per cent of that volume, making it the largest single category, states the report by Emma Main from Shanghai in the South China Morning Post.

In October alone, 82 new portfolios have been listed on the platform as of Thursday. Most lenders said the average age of the delinquent cardholders was between 40 and 50. Others, such as Ping An Bank, simply described the borrowers as "middle-aged".

Analysts and banking industry insiders say the figures are part of a growing trend, with middle-aged cardholders carrying the highest credit risks. The situation stands in stark contrast to the United States, where credit card defaults have long been associated with young people, the report observes.

According to a February report by the Federal Reserve Bank of New York, borrowers aged 20 to 39 continued to show higher serious delinquency transition rates than older persons in the final quarter of 2025. Key drivers included higher credit usage and thinner cash buffers.

According to a manager overseeing credit card operations at the Shanghai branch of a Chinese state-owned bank, most delinquent cardholders pointed to steep salary cuts or lay-offs during debt collection.

"When that happens, they want to hold onto their homes," said the person, who spoke on condition of anonymity as he was not authorised to comment publicly. "So they prioritise mortgage repayments and family expenses. Overdue credit card bills only hurt their credit profiles, with little tangible immediate impact."

Against this backdrop, Chinese lenders are now racing to offload non-performing loans. In the first nine months of this year, portfolios worth a total of 322.2 billion yuan were registered on the Banking Credit Assets Registration and Circulation Centre, up 26.4 per cent year on year. Looking ahead, observers expect credit card bad-loan ratios to stay elevated, the report states.

Analyst Liao Zhiming at Wuhan-based Huayuan Securities noted that mounting bad loans paired with tougher regulatory requirements had prompted more Chinese lenders to tighten new credit card issuance.

(Except for the headline, this article has not been edited by FPJ's editorial team and auto-generated from an agency feed.)