In Q4 2021 Hong Kong’s Consumer Credit Market Continued its Growth Trajectory Towards Pre-Pandemic Levels

  • Consumer preferences for type of credit shifted as growth was observed for all major consumer credit products, except for credit cards 
  • Increasing participation from younger generations (Gen Z) drove credit growth 
  • Lenders increased their risk appetite, with a significant shift observed in the personal loans market 

The newly released TransUnion (NYSE: TRU) Q4 2021 Industry Insights Report shows the continued recovery of the Hong Kong consumer credit market at the end of last year, mirroring wider improvements in macro-economic indicators over the same period. In Q4 2021, unemployment was almost half the rate it was at the same time the year before and private consumption, although still behind pre-pandemic levels of Q4 2019, rose by 7.3% year-on-year (YoY)1. All data in the latest TransUnion report pre-dates the latest increase (wave five) of COVID-19 cases in Hong Kong. While there may be macro and micro impacts that are anticipated ahead as a result of a recent rise in infection rates, 2021 ended with a strong and recovering credit market trajectory.

Originationsa measure of new accounts opened that is a function of both credit demand and supply—increased across all major lending categories YoY in Q3 2021 (most recent quarter for originations due to reporting lag), with the exception of credit cards, which fell 10.6% over the same period. Originations growth was most pronounced for unsecured revolving lines, which increased 92.9% YoY. Unsecured personal loans also recorded strong originations growth over the period (41.4%), as did mortgages (25.1%) and loan on card (24.6%).

Since the onset of the pandemic, unsecured revolving lines had experienced significantly lower levels of activity, with consumers and lenders taking a cautious approach to the category. However, from Q2 2021 onward this trend has reversed. Unsecured revolving line origination growth has been supported by both banks and money lenders. The portion of total outstanding balance share for money lenders has increased from 18% in Q4 2019 to 27% in Q4 2021. Overall, total balances remained relatively unchanged YoY in Q4 2021 (-1.1%). While origination growth has been strong, average balances for this product declined because money lenders typically grant more modest lines of credit. Despite the recent growth in new accounts opened, the volume of open unsecured revolving line accounts is still below pre-pandemic levels.

The overall growth in originations across the market also propelled the overall credit active population. In the final full quarter of data (Q4 2019) before COVID-19 impacted Hong Kong, the volume of credit-active consumers was growing by 2.5% YoY. A year later annual growth fell to just 0.1%. In Q4 2021, YoY growth in credit active consumers rebounded to 0.9%. The overall increase in the credit active population indicates a re-engaged consumer credit market, but one that is evolving with shifts in consumer preferences toward specific products.

TransUnion insights show that the number of consumers with more than one type of credit product in their wallet is growing at a faster rate than those who only carry credit card(s) (the most widely held consumer credit product category in Hong Kong). In Q4 2021, the YoY growth in the number of consumers who only carry credit card(s) in their wallets was just 0.2%. For consumers who hold credit card(s) and personal loan(s) (second most popular wallet profile in Hong Kong) the number declined in the same period by 0.6%. In contrast, the number of consumers who carry credit card(s) and any other credit product (excluding personal loans) grew by 2.2%. This clearly shows that consumers are re-engaging and opening diverse products that best fit their needs, preferences, and appetite.

Although credit card originations fell in the latest quarter as other categories became the focus of growth, there were still other encouraging metrics for this most widely held credit product. In Q4 2021, outstanding credit card balances increased 3.0% YoY – the strongest growth rate of any of the major consumer credit categories. Additionally, loan on card (a linked product) also showed strong originations growth, up 24.6% YoY in Q3 2021. For both credit cards and loan on card, average account balances increased YoY in Q4 2021, up 3.2% and 1.8%, respectively – a clear indication of the value and utility consumers place on these products. Although credit card lenders have continued to focus on lending to existing customers, there are segments of the market that experienced originations growth. New credit cards to prime and below2 consumers increased 2% YoY in Q3 2021.

“It’s now just over two years since COVID-19 hit Hong Kong and the consumer credit market is still clawing its way back to pre-pandemic levels of activity. With wave five of COVID-19 infections hitting Hong Kong in Q1 2022, market participants will be paying close attention to see if lenders continue to accept more risk into their portfolios in order to maintain the momentum that existed at the end of 2021,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion.

Table 1: Q4 2021 Metrics for Major Consumer Credit Products in Hong Kong

Credit Product

Q3 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




-7 bps

Loan on Card





Auto Loan




-2 bps





-1 bp

Unsecured Personal Loan




-5 bps

Unsecured Revolving Line




0 bps

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


Younger generations gained increased access to credit

The latest TransUnion Hong Kong IIR showed an increased appetite for risk and lending to new consumer groups – especially when looking at lending to younger generations. In Q3 2021, for credit cards, the distribution of Gen Z (those born during or after 1995) consumer originations increased by nine percentage points, up from 12% in Q3 2020 to 21% in Q4 2021. For mortgages, younger generations also dominated – 56% of demand (as measured by enquiries) came from Gen Z and Millennials (born 1980–1994).

Lim Moore continued: “Younger generations are increasingly fuelling growth in the Hong Kong consumer credit market. For many lenders, risk expansion opportunities for new-to-credit consumers or those with very limited credit history is a new frontier, and it’s important to leverage enhanced data when developing strategies to support this growing market. By empowering more young consumers to access credit, lenders are also acting as an increasingly important catalyst for economic growth – giving people access to the financial opportunities they need to achieve great things.”

Personal loans showed risk shift as lenders continued to seek growth

Personal loans were the only unsecured consumer credit category to record an increase in both originations and outstanding balances in the most recent quarter. The growth in outstanding balances (up 1.0% YoY in Q4 2021) in this category was the first since Q4 2019.

Although banks continued to dominate the unsecured personal loans market, with 73% of new loans granted, there were a number of emerging trends. The risk distribution—a reflection of lenders’ appetite, measured by the percentage of new account originations to below prime consumers— broadened across lender types. Banks, who have traditionally focused on originating prime and above consumers, increased their risk distribution within below prime consumers from 40% in Q3 2020 to 47% in Q3 2021. For money lenders, the below prime risk distribution increased from 83% to 96% over the same period. Here, lenders have been emboldened by the continued improvement of delinquency rates, which were down five basis points YoY in Q4 2021.

Resiliency persisted at end of 2021

The latest data also charts the change in credit scores for the credit-active population over the last year. For the majority of borrowers, they have maintained or improved their score YoY in Q4 2021, mirroring wider economic growth over the period.

Although the TransUnion IIR looks back at historic data, its sister report—the Q4 Consumer Pulse3 which was conducted immediately before wave five of the COVID-19 pandemic hit Hong Kong—showed that there was every reason to believe wider consumer credit market growth would be sustained. Two in five (40%) of consumers indicated their desire to apply for new credit in 2022, with 44% saying they would be applying for a new credit card, 42% wanting to open a new personal loan, and 30% applying for a new home loan.

“Coming into wave five of the pandemic in Hong Kong, there were encouraging signs that lenders were actively seeking growth amongst different consumer groups. COVID-19 and wider global geopolitical events will all have a bearing on lender and consumer confidence in the coming quarters. Lenders will need to constantly review their risk management techniques as they continue to adjust to volatile global economic and local market conditions,” concluded Lim Moore. “In Q4 2021, increased consumer choice and lender willingness to explore new markets meant retaining customer loyalty and ensuring the provision of relevant credit offers were the area of focus for many. Lenders who utilise the latest data and insights techniques to continue to do this will be the ones best able to navigate any uncertainty ahead.”

For more information about the TransUnion Hong Kong Industry Insights Report and to register for TransUnion's Q4 2021 Industry Insights Report webinar scheduled for 16, March at 3:00pm HKT, please visit our dedicated website page.

1. Census and Statistics Department of the Hong Kong Special Administrative Region (HKSAR) Government shows Q4 2021 adjusted unemployment rate at 3.9%, down from 6.6% in Q4 2020. Oxford Economics data show a quarterly private consumption annualised growth rate of 7.3% in Q4 2021.
2. TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = CC to JJ.
3. Results of TransUnion Consumer Pulse Study of 1,100 Hong Kong adults conducted 1-18 November, 2021.