Retail Revival Fuels Surge in Consumer Credit Balances
TransUnion's Q3 2023 Industry Insights Report unveiled notable shifts in Hong Kong's credit market. Despite a decrease in credit card originations, overall credit utilisation rose significantly, fuelled by a revival in retail spending. This was particularly evident in the subprime and near prime segments where utilisation saw the most substantial increases.
Robust 32% YoY growth among new-to-credit consumers indicated a resilient credit market. In the mortgage sector, origination volumes surged 18.7% YoY, driven by declining property values and new government policies aimed at boosting the housing market.
Revolving lines of credit also saw a noteworthy uptick (growing by 22.3% YoY), reflecting increased consumer engagement in retail shopping. Conversely, origination volumes for unsecured personal loans dipped by 6.8% YoY, albeit with a significant increase in average new account balances.
TransUnion analyses indicated a dynamic credit landscape shaped by evolving consumer behaviours and strategic lender offerings. The significant role of digital banking and shifting focus toward more personalised and digital consumer experiences were also key factors.
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Summary of growth in unsecured lending products Q3 2023
*Originations reported one quarter in arrears due to data lag and reflects Q2 2023 volumes. Growth reflects movement between Q2 2022 and Q2 2023 for year-over-year comparison.
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”Lenders seeking further confident growth opportunities could consider the untapped potential of new-to-credit consumers, consisting of younger consumers coming of age and consumers who are new to the Hong Kong region, particularly as companies are increasing efforts to attract international talent in a post-COVID-19 environment."
Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion