TransUnion Q2 2021 Industry Insights Report

Customer Loyalty is Key as Hong Kong Credit Demand Rebound Continues

Our newly released TransUnion Q2 2021 Industry Insights Report shows an improvement in key credit market indicators. The rebound was influenced by the Hong Kong economy continues recovering from the impact of COVID-19, having recorded its second successive quarter of strong GDP growth1. Private consumption, which grew by 6.5% YoY in Q2 2021, was a major contributor to the credit market recovery.

Credit cards lead this upward trend with originations — a measure of supply and demand — up 26% in the last quarter, and outstanding balances increasing by 1%. This is the first YoY increase since Q4 2019.

Delinquency rates improved for unsecured personal loans, unsecured revolving lines and credit cards, showing an YoY improvement of 25, 18 and 11 basis points (bps), respectively.

As the economy recovers and consumers re-engage in the credit market, card issuers can benefit from building and maintaining loyalty amongst existing customer base. Research presented at the recent TransUnion Financial Services Summit showed the dynamics of shift in consumer loyalty in the credit card market. That means lenders need to quickly respond and adapt to increased competitiveness, gain a higher share of card wallet and build long-term relationships.

Download the full report for more in-depth details and stats on how Hong Kong consumer credit products are performing.

Table 1: Q2 2021 Metrics for Major Consumer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage balance data which is from the Residential Mortgage Survey (March 2021) published by the Hong Kong Monetary Authority)

i. Originations are viewed one quarter in arrears to account for reporting lag.
ii. 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.
iii. Delinquency data are reported at a balance level except for mortgages, which are reported at an account level.

The future is loyalty

TransUnion’s card loyalty study showed 21% of consumers switched lenders within a year while typically transferring about half of the balance. Trigger events for switching include improved credit scores and new offers — such as a loan on card (LoC). Such offers can be effective for lenders looking to reengage with and grow their share of the market. At just 7% penetration, LoC customers are typically younger, with high credit needs spread over several active credit cards.

In such a dynamic and competitive environment, lenders taking a proactive approach to their account management strategies could emerge from the pandemic more successfully than those who don’t.

MARIE CLAIRE LIM MOORE

“While pandemic-related threats to the economy do remain, the Hong Kong recovery is clearly gaining momentum. As consumers continue to increase their spending and reassess their credit needs, we expect maintaining and managing customer loyalty to be a growth engine for lenders.”

Marie Claire Lim Moore, Chief Executive Officer, Hong Kong TransUnion

1 Latest GDP figures show growth of 7.6% in Q2 2021, following growth of 8.0% in Q1 2021 (source: Census and Statistics Department)

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