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)
“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