TransUnion Q4 2020 Industry Insights Report

Hong Kong Consumers and Lenders Continue a Cautious Approach to Credit.

The global economic slowdown’s ongoing impact can be felt across the Hong Kong economy — where a pronounced drop in credit demand and supply mirrors consumer and lender caution.

TransUnion’s newly released Q4 2020 Industry Insights Report reveals rising delinquencies and a continued decline in consumer demand for credit, while younger generations appear to be driving credit growth.

Overall demand for consumer credit products typically linked with discretionary spending have the hardest hit — with unsecured revolving lines down 35.7% YoY and credit cards dropping by -27.1% YoY. At the same time, improved housing affordability has seen a surge of 8.3% YoY in mortgage enquiries.

While delinquencies remain lower than in other mature credit markets, the challenging economic environment resulted in a deterioration in credit card performance. Lenders will remain cautious until they are able to adjust their risk strategies in line with changing consumer behaviours. Note that generational preferences and behaviours play an important role — where younger generations drive credit growth across the wider consumer credit market.

Table 1 : Q4 2020 metrics for Major Consmer Credit Products in Hong Kong

Source: TransUnion Hong Kong (except for mortgage data which is from the Residential Mortgage Survey (December 2020) 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.

Francis Lau

“Although headline figures show an overall decline in consumer credit market activity, when we look deeper into generational behaviours, there are some meaningful trends emerging that may shape the outlook for 2021.”

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

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