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TransUnion finds retail revival fuels surge in consumer credit balances

Wednesday 6 December 2023 15:28 CET | News

TransUnion has published a Q3 2023 Hong Kong Industry Insights Report, providing lenders with insights into the latest trends that drive the credit market. 

 

The published report states that cardholders are continuing to leverage their credit cards at a time when Hong Kong’s economy is showing signs of revitalisation in a context of stabilised economic indicators and encouraging interventions by the government. Average consumer credit card utilisation increased across all risk tiers during Q3 2023, compared to the same quarter in 2022, leading to strong card balance growth. At the same time, the number of new-to-credit consumers in Hong Kong increased by 32% year-over-year (YoY), the most significant rebound since the pandemic, indicating growth momentum in consumer credit participation. 

TransUnion has published a Q3 2023 Industry Insights Report, providing lenders with insights into the latest trends that drive the credit market.

 

Cardholders leveraged their credit lines for rising spend demand 

In Q2 2023, credit card origination volumes saw a 12.2% YoY decline, but the average credit limit on new cards increased by 10.1% compared to Q2 2022, indicating a heightened lender appetite to meet rising spend patterns. Existing card accounts also reflected increased consumer spending, with outstanding balances rising by 15.9% YoY in Q3 2023. Average balances per consumer and total credit limit on existing cards increased by 14.0% and 2.7%, respectively, over the same period. 

Credit card utilisation increased across all risk tiers in Q3 2023, with subprime and near prime tiers experiencing the highest increases. The surge in utilisation and higher card balances were likely driven by increased retail spending, with retail sales growing by 13.7% YoY in August 2023. Contributing factors include stable Base Rates since July 2023 and low inflation rates of 1.8%–2.0% over the quarter. Cash-back reward programs and retail-focused campaigns further fuelled increased card utilisation, with more expected during the upcoming festive season. 

Younger consumers, especially from Gen Z, played a significant role in the growth trends. Gen Z's share of new account originations increased from 14.7% in Q2 2022 to 17.4% in Q2 2023. Lenders could attract further growth by creating personalised offers and seamless onboarding experiences tailored to this generation. 

Mortgage originations grew off the back of falling property prices 

Mortgage originations saw an 18.7% YoY increase in Q2 2023 after a period of relative stasis. Falling property prices led to this growth, with property prices consistently declining since March 2023. Mortgage originations are expected to continue growing, driven by measures introduced in the 2023 Policy Address to address affordability concerns. These measures include halving buyers' stamp duty for non-permanent residents and residents buying a second home, as well as waiving the 10% stamp duty for owners reselling within two years. 

Revolving lines grew, unsecured loans declined 

Revolving line originations grew by 22.3% YoY in Q2 2023, supported by a retail shopping resurgence and lender campaigns. However, caution was evident as average new account balances decreased. Unsecured personal loan originations declined by 6.8% YoY, but the average new account balance increased. Banks remained dominant in personal loans, with a 72.2% market share of total outstanding balances. Non-bank moneylenders and virtual banks contributed smaller, yet substantial, portions to the total balances –23.3% and 3.9%, respectively–both slightly higher than the same quarter, the previous year. 

About TransUnion

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries and territories, including Hong Kong. It maintains credit records on over 5.5 million consumers. 

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Keywords: report, credit card, retail, lending
Categories: Payments & Commerce
Companies: TransUnion
Countries: Hong Kong
This article is part of category

Payments & Commerce

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TransUnion

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