Retail Revival Fuels Surge in Consumer Credit Balances

  • Despite year-over-year decline in new cards issued, utilisation and credit lines grow amidst retail spending revival
  • Revolving line growth mirrors retail recovery while providing an alternative to cards
  • Mortgage expansion aligns with declining property values, with new policies expected to bolster buyer interest

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 solid growth momentum in consumer credit participation.

These insights are part of the Q3 2023 Industry Insights Report published by global information and insights company and Hong Kong’s leading credit reference agency, TransUnion’s (NYSE: TRU), providing lenders with insights into the latest trends that drive the credit market.

Cardholders leveraged their credit lines for rising spend demand

Although credit card origination volumes—a measure of new accounts opened—declined by 12.2% YoY, the average credit limit issued on new cards during Q2 2023 was 10.1% higher than in Q2 2022*, reflecting an increase in lender appetite to make credit available to meet rising spend patterns. This increase in consumer spending was also reflected across existing card accounts, as outstanding balances increased by 15.9% YoY in Q3 2023 and average balances per consumer increased by 14.0% YoY in Q3 2023, while the total credit limit on existing cards increased by 2.7% over the same period.

Average consumer credit card utilisation increased across all risk tiers[1] during Q3 2023 YoY, although the greatest increases were seen in the subprime (5.5 percentage points higher) and near prime (3.2 percentage points higher) risk tiers. Cardholders in the super prime segment were more conservative, increasing their utilisation by only half a percentage point.

This increased utilisation and higher card balances were likely driven by higher levels of retail spending. The value of retail sales increased in nominal terms by 13.7%[2] YoY in August 2023, while the value was provisionally estimated to have increased by 19.3%[3] YoY for the first eight months of 2023. This spending increase could have been encouraged by the Base Rate remaining stable since July 2023, along with inflation remaining at a low rate of 1.8%– 2.0% over the quarter[4].  

Other contributing factors to the increased card utilisation may be enhanced cash-back reward programmes offered by lenders seeking to capitalise on the retail resurgence. While those campaigns came to an end during Q3 2023, more are likely to follow during the upcoming festive season.

“The substantial card balance growth has been driven by increased spending capacity, well supported by limit increases on new and existing cards issued over the past quarter,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion. “Lenders seeking further confident growth opportunities could consider the untapped potential of new-to-credit consumers, consisting of younger consumers coming of age and consumers who are new to the Hong Kong region, particularly as companies are increasing their efforts to attract international talent in a post-COVID-19 environment.”

Younger consumers entering the credit market have been a driver of the recent growth trends—TransUnion’s data shows that the share of new account originations from Gen Z consumers increased to 17.4% in Q2 2023 from 14.7% in Q2 2022. The fourth quarter has historically been the one in which Gen Z has consistently shown the greatest contribution to new card volumes over the last four years, highlighting that lenders could attract further growth by creating personalised offers that appeal particularly to this generation, along with a seamless onboarding experience, which is important to this segment.

Table 1: Summary of growth in unsecured lending products Q3 2023                 


Origination Volumes#

Year-over-Year Change

Outstanding Balances in HKD

Year-over-Year Change

Credit Card



HK$ 154.4 billion


Unsecured Personal Loan



HK$ 107.5 billion


Revolving Loans



HK$ 17.8 billion


# Originations reported one quarter in arrears due to data lag and reflects Q2 2023 volumes. Growth reflects movement between Q2 2022 and Q2 2023 for year-over-year comparison.

Mortgage originations grew off the back of falling property prices    

After a long period of relative stasis, mortgage originations increased by 18.7% YoY in Q2 2023, with the Hong Kong House Price Index having consistently fallen each month since its 2023 high in March this year[5] – although property prices remain on average near highest levels in Asia.[6]

Looking forward, mortgage originations are likely to continue to grow significantly, following the 2023 Policy Address made by the Chief Executive, John Lee, on 25 October 2023, with measures to be introduced to address affordability concerns expressed by the market.

The halving of buyers’ stamp duty to 7.5% for non-permanent residents and for residents buying a second home, and the waiving of the 10% of home price stamp duty for owners who resell within two years of buying, are both likely to stimulate activity in this sector. The cutting of these costs provides more liquidity for consumers wanting to enter the property market, as they will have more capacity for a deposit or more money available to spend on home improvements once they purchase a home. Furthermore, it could also enable people to apply for mortgages more confidently, knowing that they will have additional capacity to service any debt obligations.

Additional stimulation is likely after the Capital Investment Entrant Scheme is launched to help attract investment to Hong Kong by facilitating entry for residence.

Revolving lines grew, unsecured loans declined

Revolving line originations continued to grow off the back of the resurgence in retail shopping and was supported by lender campaigns, particularly from virtual banks. Originations increased by 22.3% YoY in Q2 2023, although average new account balances decreased by 11.2% YoY over the same period. This decrease reflects caution from lenders as they assigned lower limits at origination, given that this product is most frequently taken out by higher risk consumers.  

Origination volumes of unsecured personal loans decreased by 6.8% YoY in Q2 2023, although the average new account balance increased by 10.6% YoY over the same period. As a result of these higher value new loans, outstanding balances increased by 5.0% in Q3 2023, and average balances per consumer increased by 4.8% in Q3 2023.

The market share of new personal loan accounts by lender type saw a shift, with banks originating 39.4% of new loans, a slight decrease from the same quarter previous year (40.2%), while moneylenders and virtual banks grew their market share, reflecting evolving strategies and consumer preferences. The distribution of outstanding balances across lender segments revealed that, despite having fewer accounts, bank-issued loans dominated the market with 72.2% of the total outstanding balances, down slightly from 73.7% in Q2 2022, underscoring banks’ significant role in the personal loan market and greater focus on lower risk borrowers who typically receive larger loan amounts. In contrast, non-bank money lenders 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, previous year.

“Growth in these products is primarily due to supply-side pricing and promotions over the past three quarters, and while many of these campaigns have run their course, consumers are more aware of the choices available to them and will likely continue to seek out offers that reward them meaningfully for their loyalty,” Sun said.

For more information about the TransUnion Hong Kong Industry Insights Report, register for our webinar on December 6, 3pm HKT by clicking here.

* Originations are viewed one quarter in arrears to account for reporting lag. 

[1] TransUnion CreditVision® risk score: super prime = AA; prime plus = BB; prime = CC; near prime = DD to HH; subprime = II to JJ. Prime and below = BB to JJ
[2] - August retail sales up 13.7%
[3] Press Releases Detail (
[4] Hong Kong Inflation Rate (
[5] Hong Kong House Price Index (
[6] Price per Square Meter/Square Foot in Hong Kong compared to Asia (