IT WASN'T just the girls in miniskirts and platform boots handing out credit cards on street corners. What really set the South Korean authorities worrying that the credit boom was getting out of hand were media reports last year that a bank had given a family's pet dog its own credit card. Before the crisis, South Koreans had generally shown a seemingly immutable and rather Confucian degree of financial conservatism and thrift. But afterwards, with interest rates low and banks eager to tap new markets, people began to borrow. Between 1999 and 2002, the issue of new credit cards in South Korea grew at an annual compound rate of 75%. The average number of cards per user has leapt to four.

Traditionally, banks in developing Asia have cared little for the consumer, other than as a cheap source of funds to be shovelled into the maws of the big companies that were their chief customers. Today banks across the region look to the consumer as their source of future profits and try to ply him with credit cards, mortgages, car loans and unsecured credit. Households now account for nearly 40% (and rising) of East Asian banks' total lending, up from 27% in 1997. In South Korea, total household debt has been rising by 25% a year and now accounts for half of all bank lending. Two years ago China's banks had just $6.5 billion in outstanding mortgages; today the figure is five times that. The Bank of China, the least bad of the country's four big banks, expects that in five years' time consumers will account for half of the bank's loans. If that really is right, an end to Chinese banks' problems may be in sight.

From both a policymaker's and a bank's point of view, says Sun-bae Kim, regional economist at Goldman Sachs in Hong Kong, going after the consumer makes sense. Many companies responded to the Asian crisis by cutting dangerously high levels of debt. Companies, in other words, have become much more cautious users of savings. Banks, for their part, are now often wary of lending money to companies, yet they are flush with deposits. The question for policymakers, says Mr Kim, is what will generate future growth in the real economy? The question for bankers is, how are savings to be mobilised in future? South Korea, eagerly watched by its neighbours, offers answers to both these questions. Its domestic demand (and particularly household demand) is already playing a much bigger role in driving growth, relative to the export sector, than it used to. And households themselves are now borrowing on an unprecedented scale—for consumption, to be sure, but also for investment, through purchases of residential property.

Salomon Smith Barney, part of Citigroup, calls consumer finance “the single most powerful theme in Asian financial services”. The investment bank says that lending to consumers is vastly more profitable than to companies. Credit cards, for instance, can generate a risk-adjusted return on assets of 5% or more, compared with 0.2% for the most commodity-like of corporate loans. What is more, says the bank, even in markets where mortgage penetration seems pretty high (Hong Kong, Singapore, Thailand and Taiwan), plenty of room exists for other products to catch on: revolving credit-card loans and unsecured loans, for example.

Both Visa and MasterCard say that developing Asia will for years remain their fastest-growing market. GE Capital has a highly profitable credit-card business in Thailand (where it was able to charge interest rates of up to 30%, until the government imposed a ceiling of 18%). Last month Citigroup, the world's biggest bank, won approval from the Chinese government to take its first minority stake in a Chinese bank: 5% of Shanghai Pudong Development Bank, for $112m. The ability to promote credit cards and other consumer-finance products through Pudong's 270-odd branches is a chief attraction as restrictions on foreign banks' own operations continue (HSBC, the world's second-biggest bank, has a similar stake in Bank of Shanghai). Under the terms of China's WTO accession, foreign banks may not issue domestic-currency cards until 2005.

The processing side of credit cards benefits hugely from economies of scale. Break-even point for a processing centre is reckoned to be at least 400,000 cards. In South Korea, with about 90m credit cards, the leading banks are already doing well out of this business: Kookmin Bank, for instance, has a lucrative one-third market share in credit cards. In Thailand, with a smaller market, some local banks have teamed up with international card specialists to tap into regional economies of scale. The population of Singapore, at 4.5m, despite its affluence is too small for this business to be able to flourish in isolation, which is one reason why the city-state's banks, notably DBS Bank, are pursuing a twin strategy of domestic consolidation and regional expansion.

Building up a profitable consumer-finance business is no easy ride, even in countries where much demand remains unmet. Many banks will take a tumble. For a start, a consumer-finance operation needs a good deal of money for training, marketing, branding and information technology. In order to offer people the products they really want, banks must have a clear idea of customers' behaviour, which requires minute analysis of customer information. Banks must also have a clear picture of customers' profitability. A better understanding of these issues may lead to a radical reappraisal of how different customers should be treated. For instance, low-spending customers may need to be encouraged to use ATMs rather than take up staff time in costly branches.

Other challenges for banks in developing Asia include poor payment infrastructures and low card acceptance by merchants. More important, banks in most parts of the region have no way of discovering the credit record of anyone coming through their door. In the West, credit bureaus allow banks to share information on a prospective customer, such as whether he has defaulted on a loan. Not even South Korea has a full-fledged system of credit checks yet, says Dominic Barton, the South Korea head of McKinsey, a consultancy. In Shanghai and Shenzhen, credit bureaus are in their infancy, and elsewhere in China they are absent altogether. Banks in Hong Kong, the region's most sophisticated economy, merely circulate a voluntary blacklist of offenders. Hong Kong, at least, has courts through which banks may pursue claims. Yet in other parts of Asia banks have little or no legal recourse against defaulting borrowers.

There is no doubt that consumer finance is radically reshaping, and improving, the business of some Asian banks. It is even helping to reshape some economies—but only some. South Korea's large economy has enough household demand for consumer finance to make a difference, and so do China's and Japan's. Yet the economies of South-East Asia are still too small for that. Banks there can too easily get seduced by the idea of consumer finance, says Andrew Stotz, a banking expert in Bangkok.

In Thailand, for instance, the credit-card business has been growing by an average of about 15% a year, with some banks recording double that rate of growth. Yet card loans still account for a mere 1% of banks' portfolios, says Mr Stotz, and personal loans for only 6%. Mortgages make up as much as 14% of portfolios, but mortgage lending is actually falling because of a sticky domestic economy. In this part of Asia, consumer finance is not going to drive most banks' profits for some time to come.