HSBC is retreating from its credit card operations in China nearly eight years after entering the market, as the bank has struggled to grow and turn the business profitable in the world's

second-largest economy, according to sources familiar with the matter.

The Asia-focused lender has ceased issuing new credit cards and is moving toward shutting down the service for the majority of its onshore Chinese customers, three sources with direct knowledge of the situation revealed. Two of the sources noted that the decision follows unsuccessful attempts to sell the business.

While the plans are still being finalized, HSBC may retain credit card services for a small segment of "high-end" clients, according to one source and an additional source familiar with the matter. However, standalone credit card holders—those without other HSBC banking services in China—will not have their cards renewed upon expiration. Such customers represent a significant portion of the bank's credit card business in the country.

This unreported decision highlights the difficulties HSBC faces in expanding its presence in China, even as it remains committed to increasing its focus on Asia and strengthening its foothold in key regional economies. The sources requested anonymity as they were not authorized to discuss the matter publicly.

"As part of our Premier and Global Private Banking services in mainland China, we continue to offer credit card services focused on international travel and lifestyle features," an HSBC spokesperson told Reuters, declining to provide further details.

The move represents a shift in HSBC's strategy after initially aiming for rapid growth in China's credit card market. Launched in late 2016 as part of the bank's broader Asia expansion and retail banking ambitions, the credit card business initially gained traction. By September 2019, HSBC had around one million credit card users in China, with outstanding balances reaching $500 million within 18 months of the service's launch.

However, growth stagnated, and transaction volumes plummeted during China's strict COVID-19 lockdowns, one source said. Since then, economic pressures have further dampened consumer spending, shrinking the overall credit card market in the country.

Data from Insight & Info Consulting shows that China's total credit card issuance peaked at 800 million in 2021 before declining to 767 million by 2023, reflecting a broader contraction in the market as the economy slows. Photo by ペウゲオト, Wikimedia commons.