TransUnion Q1 2021 Industry Insights Report

Hong Kong Consumer Credit Demand Rebounds as Macroeconomic Conditions Improve.

As Hong Kong consumers deleverage to cope with uncertainties associated with the pandemic, there’s rising demand across major lending categories — while younger generations show a stronger rebound in card balances.

TransUnion’s newly released Q1 2021 Industry Insights Report (IIR) shows demand for consumer credit rebounded in the latest quarter, mirroring recent GDP and retail sales growth.*

Almost all major consumer lending categories recorded strong growth in credit enquiries — with mortgages up 25.1% year-on-year (YoY) and credit cards up by 8.3% YoY. At the same time, unsecured revolving lines (used for discretionary spending) continue a downward trend.

Millennials appear to be returning to pre-pandemic spending levels, with credit card balances showing they are recovering at a faster rate than other generations. However, outstanding credit card balances were down overall YoY in Q1 2021, the difference across generations was marked. Despite this rebound, consumers (led by older generations) are deleveraging their unsecured credit balances (-8.9% lower YoY).

Overall delinquency rates in Hong Kong have remained low compared to international markets where most of the major consumer credit categories saw a YoY improvement — yet not quite back to pre-pandemic levels.

To manage volatility associated with macroeconomic shocks, lenders should monitor those movements closely, especially in below prime segments.

Table 1: Q1 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.

Francis Lau

“There are several healthy market trends lenders should consider in extending new credit to consumers. As pandemic-related concerns begin to ease, lenders should take note of these positive trends and be prepared to meet the needs of consumers as their credit demand rebounds in 2021.”

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

*Latest GDP figures show growth of 7.9 % and retail sales figures growth of 7.5% in Q1 2021 (source: Census and Statistics Department)



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