Hong Kong Consumer Credit Market Shows Impact of Latest Wave of Pandemic

  • Demand for new credit down across a number of major categories, in light of recent resurgence of COVID-19 infections
  • Despite drastic decline in new card openings, balances remained steady
  • Unsecured loans and revolving lines gaining popularity amongst Hong Kong consumers
  • Money lenders continued to grow share within unsecured loan categories

The newly released TransUnion (NYSE: TRU) Q1 2022 Industry Insights Report reflects the impact of wave five of the COVID-19 pandemic in Hong Kong, with muted consumer sentiment reflected in subdued levels of overall activity across a number of major categories in the consumer credit market.

In Q1 2022, enquiries—a measure of consumer demand—were roughly three quarters (77%) the overall level they were in the corresponding pre-pandemic quarter of Q1 2019, and 91% of what they were the same time twelve months ago (Q1 2021). The decline in enquires was across a number of major consumer lending categories, falling most for mortgages (down -36.9% YoY in Q1 2022) but also down (-12.4%) for credit card which is the most widely held credit product in Hong Kong. Enquires often reflect wider consumer sentiment, and this appears to be true in Q1 2022, with the TransUnion Consumer Pulse Study* conducted during the same period showing just over a quarter (26%) of people experienced a drop in household income during the last three months.

Originations, which measure new accounts opened and is a function of both consumer demand and lender willingness to advance credit, was impacted by this downward trend in consumer demand for new credit (or credit products with new reward features as is often the case for credit cards). In the fourth quarter of 2021 (latest available data for originations) originations fell drastically for credit cards (-25.8% YoY). However, other categories showed YoY growth, with unsecured revolving lines recording the biggest increase – up 130.1%. Unsecured revolving lines recorded significant origination declines at the beginning of the pandemic but have since seen a YoY improvement in recent quarters.

Much of the recent origination growth in unsecured personal loan (up 21.0% YoY) and revolving accounts is due to favourable comparisons against 2020 levels, which were depressed for these credit products. If we compare to the corresponding pre-pandemic quarter (Q4 2019) the trend for unsecured personal loans was a more moderate increase over a longer period, up 16.7% over two years. For unsecured revolving lines it was still a strong increase, up 93.6% compared to two years ago. In contrast, the YoY fall in credit card originations is consistent with a larger decrease over the two-year period which showed a -36.1% drop when compared to Q4 2019.

“Prior to wave five of the pandemic, the Hong Kong consumer credit market was trending back towards pre-pandemic levels. Although we will eventually return to these higher levels of activity, the latest spike in cases has definitely elongated the recovery timeline,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “However, it is important consumers and lenders remain resolute – Hong Kong has already shown its ability to bounce back from earlier waves, and there isn’t anything in the data to suggest this won’t be the case again.”

Table 1: Q1 2022 Metrics for Major Consumer Credit Products in Hong Kong

Credit Product

Q4 2021(i) Originations – Annual Change

Enquiries – Annual Change

Outstanding Balances – Annual Change

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

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

Credit Card





-4 bps

Loan on Card





0 bps

Auto Loan





2 bps






0 bps

Unsecured Personal Loan





-10 bps

Unsecured Revolving Line





5 bps

Source: TransUnion Hong Kong (except for mortgage data which is from the Residential Mortgage Survey (March 2022) 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.

Unsecured loan categories gaining popularity

Although credit cards remain the most widely held consumer credit product by a significant margin, a feature of the pandemic has been the emergence of changing wallet profiles in the Hong Kong market. The latest quarter’s data has continued to reinforce this trend, showing that consumers are changing both the mix of credit products they demand and how they leverage credit.

In the unsecured lending space, despite the continued YoY fall in credit card originations (down -25.8% YoY in Q4 2021), unsecured personal loans and unsecured revolving lines both recorded an increase – up 21.0% and 130.1%, respectively.

However, total outstanding balances—a function of both the number of active open accounts and their average balance and utilisation—remained relatively unchanged, with only unsecured personal loans recording a material increase (up 4.7% YoY in Q1 2022).

Lim Moore observed: “New accounts opened, measured by originations, can be influenced by a multitude of factors. In the most recent quarter, the fall in credit card volumes is most likely due to a fall in both promotional activity by lenders as well as consumers taking a cautious approach to some forms of credit. The general robustness of outstanding balances, and thus utilisation across categories, clearly demonstrates the ongoing utility of credit cards for consumers, and we anticipate the latest fall in enquiries will start to rebound as cases and social restrictions related to the pandemic subside.”

As in other recent TransUnion IIR reports, the emergence of younger generations—Gen Z (born 1995–2004) and Millennials (born 1980–1994)—continues at pace. Between them, these groups accounted for almost three in five (57.1%) of all new accounts opened in Q4 2021, and a similar percentage (60.8%) of enquiries in Q1 2022.

Money lenders continued to drive growth

Over the last year, the number of originations coming from non-bank lenders (often known as money lenders) has increased significantly. In Q4 2020, non-bank lenders accounted for just over one in ten (11.6%) new products opened as they had reduced their risk appetite alongside a general deleveraging by consumers at the time. In Q4 2021 (latest available data) this had more than doubled and had increased to almost a quarter (22.6%). In order to gain a better picture of the longer-term trend, comparison to a pre-pandemic quarter (Q4 2019) shows a 125.1% increase in the volume of new products opened with non-bank lenders.

In the latest quarter (Q4 2021 for originations), for certain products, non-bank lenders issued more new products than bank lenders – for unsecured personal loans 56.3% of originations were from non-bank lenders. For revolving lines, although the share of new lines originated by non-bank lenders fell from 72.7% in Q4 2020 to 45.6% in Q4 2021, this was not because they issued fewer new accounts, it was because bank lenders had aggressively increased their lending in this category. In Q4 2021 YoY non-bank revolving line originations increased by 77.3%, compared to 463.9% for bank lenders.

Lim Moore commented: “The continued emergence of money lenders in the Hong Kong consumer credit market means unsecured credit products have experienced exponential growth as competition has increased. Money lenders often cater for smaller average balance amounts and are likely to be increasingly important participants in the market as it continues to recover.”

Credit performance remained robust

During the first quarter of 2022, the latest wave of the pandemic contributed to an increase in the Hong Kong unemployment rate** to 5.0% (Q1 2022), up from 4.5% in the period before, and a corresponding increase in households reporting a fall in income*. Despite these headwinds, delinquencies in the market continued to be relatively unchanged, showing consumers are still able to meet their credit obligations.

“Hong Kong consumer delinquency rates continue to be at low levels and are significantly less than in other developed credit economies around the world. Depending on the shape of any wider economic recovery and the delayed nature of some of the financial impact from the latest wave of the pandemic, lenders will be paying close attention to these numbers. Only by diligent monitoring of their portfolio and by leveraging advanced data techniques can they maintain this impressive track record,” concluded Lim Moore.

For more information about the TransUnion Hong Kong Industry Insights Report and to register for TransUnion's Q1 2022 Industry Insights Report webinar scheduled for 22 June at 3:00pm HKT, please visit our dedicated website page.

*TransUnion Consumer Pulse Study of 1,088 adults conducted Feb 14-Feb 23, 2022.
**Census and Statistics Department of the Hong Kong Special Administrative Region (HKSAR) Government shows Q1 2022 adjusted unemployment rate at 5.0% (Jan-Mar 2022), up from 4.5% in the period before (Dec 2021-Feb 2022). Additional figures have been released more recently showing the continuation of this trend with unemployment at 5.4% Feb-Apr 2022.