Hong Kong,

Hong Kong Consumer Credit Market Continues Positive Trajectory as Consumption Grows


  • New credit growth observed across major consumer credit categories
  • Credit cards recorded a year-on-year increase in outstanding balances – the first since Q4 2019
  • Maintaining customer loyalty key to tapping a rebound in credit card growth
  • Loan on card identified as key offering to maintain or gain top-of-wallet position


The newly released TransUnion (NYSE: TRU) Q2 2021 Industry Insights Report shows an improvement in key credit market indicators. This occurred as the Hong Kong economy continued to rebound 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.

Accompanying the Industry Insights Report, TransUnion also released findings from research presented at its recent Financial Services Summit that showed the shifting dynamics of consumer loyalty in the credit card market and the behaviours of loan on card consumers. These actionable insights are designed to help guide lenders and assist them in making informed lending and account management decisions so they can grow their businesses and better serve Hong Kong consumers.

In the latest quarter, originations—a measure of new accounts opened that is a function of both credit demand and supply—increased year-on-year (YoY) across all major unsecured lending credit categories and were particularly strong for credit cards – up 26%. Unlike other major credit products, credit cards also recorded growth in outstanding balances – up 1% YoY in Q2 2020. This was the first YoY increase since Q4 2019.

This growth in originations suggests consumers are re-engaging in the credit market and are starting to leverage credit again as the economy gains momentum and consumption levels increase.

Hong Kong consumers continued to demonstrate their ability to manage their credit responsibilities well, with improvements in delinquency rates recorded across all the major consumer credit categories. This trend was most pronounced for unsecured personal loans, unsecured revolving lines and credit cards, which recorded YoY improvements of 25, 18 and 11 basis points (bps), respectively.

This general improvement in outlook and performance across the Hong Kong consumer credit market was supported by the findings of the latest TransUnion Consumer Pulse Report2. The Q2 2021 report showed an 11-percentage point decline in the number of people who reported that their household incomes were currently negatively impacted due to the pandemic. Although this still represented a significant 45% of Hong Kong residents, it showed the impact of the pandemic was fading.

“Increased consumer consumption is providing the fuel for a recovery in the consumer credit market and wider economy. Credit cards are the most widely held consumer credit product in Hong Kong. In Q2 2021 we witnessed an important milestone, with a growth in outstanding card balances starting to reverse some of the impacts of the pandemic,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “It is likely originations and balance growth will continue on a positive, though at times bumpy, trajectory as Hong Kong continues to chart its path to recovery.”


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

Credit Product

Q1 2021(i) Originations – Annual Change

Outstanding Balances – Annual Change

Balance-Level Serious Delinquency Rates(ii)(iii)

Balance-Level Serious Delinquency – Annual Change (Basis Points) (bps)

Credit Card




-11 bps

Loan on Card




-1 bp

Auto Loan




-12 bps





-1 bp

Unsecured Personal Loan




-25 bps

Unsecured Revolving Line




-18 bps

Source: TransUnion Hong Kong (except for mortgage balance data which is from the Residential Mortgage Survey (June 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.


Maintaining credit card loyalty to tap growth in consumption

A recent research study presented at TransUnion Hong Kong’s June Financial Services Summit focused on understanding the dynamics of shifts in loyalty for credit card users3.

TransUnion’s card loyalty study showed that more than one in five (21%) consumers shift loyalty to another lender within a year. When a consumer shifts loyalty from one card issuer to another, they typically shift 57% of their outstanding card balances away from the previously preferred issuer to a new issuer, resulting in significant loss for the issuer losing preferred status.

The study also looked at the trigger events and the reasons why many consumers shift loyalty. It found that improvements to a consumer’s credit score and credit line increase offers were strong motivators for a switch. More than two in five (42%) consumers who shifted loyalty did so having had an improvement in their credit score. Often, an improvement in score enables consumers to access more competitive card offerings and programs. Similarly, a significant number (18%) of consumers who switched loyalty did so after receiving a credit line increase (CLI) offered by an existing competing card in wallet.

The size of a CLI has a significant bearing on the percentage of the balances that consumers shifted from one issuer to another. Where a competing card issuer offered a 30-40% CLI, on average consumers shifted two-thirds (66%) of their annual average balance to another card in wallet. When given a CLI of 50% or more, they shifted almost all (99%) of their balance to the new preferred issuer.

Lim Moore continued: “Card loyalty isn’t static and changes over time. As the Hong Kong economy continues to recover and grow, lenders need to understand what shapes and determines customer loyalty so they can attract, retain and reward loyal consumers. By developing a better understanding of their customers, catering to their overall credit needs, and predicting changes in behaviour ahead of time, lenders can tailor the service or offers they provide, build greater loyalty and reduce attrition.”


Loan on card offers growth opportunities for card issuers

In a separate study, also presented at the TransUnion Financial Services Summit, research4 showed that the number of consumers participating in the loan on card (LoC) market had declined in the last year due to the pandemic. It looked at how LoC could be used as an effective account management tool as lenders look to reengage with consumers in a post-pandemic world.

The study showed that while credit cards are the most popular consumer credit product in Hong Kong, only 7% of card consumers have a LoC. This untapped market is both a potential area of growth and one that can help build customer loyalty by rewarding and reinforcing existing customer relationships. LoC customers are typically younger consumers and have a higher number of open and active credit cards – a competitive market which we have shown has multiple trigger events for shifts in loyalty.

One of the main findings from the LoC research is that credit card issuers can build loyalty and share of wallet by offering this additional product. Given the typical profile of LoC customers (i.e., younger) it also represents an opportunity to create a longer-term relationship that can enable lenders to offer other products as a customer’s financial needs mature.

Research showed that over half (56% in Q1 2020) of consumers open LoCs with their top-of-wallet credit card issuer, with the remaining percentage opening a LoC with another issuer in their wallet. Again, the importance of this dynamic in creating sustained customer loyalty was significant. Overall, more than three quarters (78%) of the study population demonstrated LoC had an impact on their top-of-wallet card positioning – either helping maintain top-of-wallet position or driving a change if the LoC was with a non-top-of-wallet issuer.

“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. Market competition for acquisition and share of wallet will remain high, as debt levels remain well below pre-pandemic levels. Our research clearly shows that lenders who take a proactive approach in their account management strategies will be the ones who will emerge most successfully from the pandemic,” concluded Lim Moore.

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)

2 Results of TransUnion Consumer Pulse Study of 783 Hong Kong adults conducted June 1-June 21, 2021.

3 ‘Predicting Shifts in Card Loyalty’ studied multiple cohorts over a two-year period to analyse top-of-wallet behaviour for consumers and shifts in loyalty towards card issuers in consumers’ card wallets. To qualify, consumers must have been carrying more than two credit cards for more than a 12-month period and must be non-delinquent. Data is from the TransUnion Hong Kong consumer database.

4 ‘Understanding the Behaviours of Loan on Card (LoC) Consumers’ analysed risk, age, loyalty and balance behaviours of consumers who open LoC over a two-year period. Data is from the TransUnion Hong Kong consumer database.