TransUnion Q3 2020 Industry Insights Report

Stressed Household Finances Continue Downward Pressure on Hong Kong’s Consumer Credit Market

As the consumer credit market and Hong Kong economy reflect the persistent impacts of the COVID-19 pandemic, reduced spending is affecting lenders and borrowers.

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The newly released TransUnion Q3 2020 Industry Insights Report reveals perpetual, negative economic growth, with unemployment rates growing to a 16-year high and reduced credit demand and supply.

As 70% of Hong Kong consumers report negative impacts to household income, almost half of those cut back on discretionary spending. The result is a fall in demand for new credit and outstanding balances, except for a marginal 2% increase in loan on card credit. For bank credit cards and unsecured revolving lines — two of the most popular credit products in Hong Kong — Q3 2020 was the third consecutive quarter of YoY declines in enquiries. Delinquencies continue to rise as consumers make difficult decisions about repayments across all major consumer credit categories, driving the highest YoY increases in unsecured personal loans, auto loans and credit card balances. To better manage these risks, lenders must adopt an early intervention approach to reach out to customers needing support through these difficult times.

Q3 2020 balance-level delinquency rates of unsecured products(1)

Source: TransUnion Q3 2020 Industry Insights Research Findings for Hong Kong

1. Note: 90+ DPD for bankcard and 60+ DPD for other product types

Francis Lau

“There are undoubtedly uncertain times ahead, but with a potential vaccination on the horizon and Hong Kong’s low levels of infection by global standards, when the global recovery comes, the region will be well placed to bounce back. However, it’s how lenders and consumers respond to the financial challenges of the pandemic that will ultimately help determine the shape and speed of any recovery.”

Francis Lau, Director of Research and Consulting for TransUnion Asia Pacific

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