(Yicai) Aug. 5 -- Bank of China will begin adding litigation-related charges to overdue credit card bills, a move industry insiders say reflects mounting cost pressures on the state-owned commercial lender.

From Sept. 14, the BOC will include attorney and execution fees associated with the disposal of bad debts in customers’ credit card bills, according to a recent announcement. The policy will first be piloted in Shanghai before being rolled out to other provinces from Oct. 19. Cardholders are advised to consult their local branches for details, the bank’s credit card customer service center told Yicai.

Several industry insiders said the move signals an accounting adjustment driven by BOC's growing exposure to retail credit risks. The Beijing-headquartered lender may be restructuring its fee system to address rising operational costs.

Typically, banks cover litigation and other bad debt disposal expenses upfront and recover them from cardholders after the case concludes, as the head of credit card operations at a joint-stock bank in southern China explained to Yicai.

Another insider said not many commercial banks are expected to adopt similar measures in the short term, as the non-performing loan ratio in the sector has remained relatively stable following a surge between 2022 and 2024.

As of December last year, China's banking system reported CNY124 billion (USD17.2 billion) in credit card bills overdue by more than six months, a dramatic rise from CNY3.4 billion (USD470 million) at the end of 2008, according to central bank data. The figure jumped 26 percent in 2024 alone.

At least six listed Chinese banks reported credit card-related NPL balances exceeding CNY10 billion (USD1.4 billion) as of last December. Bank of China’s NPL balance stood at CNY10.3 billion, according to annual reports reviewed by Yicai.

Editors: Tang Shihua, Emmi Laine