TransUnion Q1 2020 Industry Insights Report

Decreased Activity in Consumer Credit Market Driven by Changes in Borrower and Lender Behavior

Against a backdrop of worsening economic conditions, Hong Kong consumers have curtailed spending and lenders have tightened their underwriting, which has caused declines in outstanding balances and origination volumes.

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The newly released TransUnion Q1 2020 Industry Insights Report shows that COVID-19 has severely amplified the impact of the 2019 Hong Kong recession, and started to shape the consumer credit market in a number of distinct ways.

With economic conditions worsening and incomes negatively affected by the global pandemic, Hong Kong consumers have been pulling back on their spending and have reduced their appetite for credit more generally. At the same time, delinquency rates continued their upward trend, especially in major unsecured lending categories, including credit cards, unsecured personal loans and unsecured revolving lines. Together, these changes in consumer and lending behavior have caused a contraction in the Hong Kong consumer credit market.

Q1 2020 Balance-Level Serious Delinquency Rates(1)(2)

Source: TransUnion Q1 2020 Industry Insights Research Findings for Hong Kong

1. Serious delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

2. Delinquency data are reported at a balance level except for mortgages which are reported at an account level.

Francis Lau

“We know macroeconomic conditions are likely to remain under stress for the remainder of 2020 and may still deteriorate further — this is true for most economies around the world. Our model aims to look at the potential trajectory of the consumer lending market in Hong Kong as a result of any changes caused by COVID-19, and will map the impact on key metrics like originations, balances and delinquencies/”

Francis Lau, director of research and consulting for TransUnion Hong Kong

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