• Fewer consumers expected income growth in the coming year compared to a year ago, with nearly one-third (30%) saying earnings are not keeping pace with inflation
• 35% said they recently reduced discretionary spending and 37% boosted emergency savings, with future spending expectations increasingly focused on essentials
• Intent to apply for new credit or refinance fell sharply from 42% in Q2 2025 to 27% in Q2 2026, despite strong confidence in credit access

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q2 2026. The report revealed that Hong Kong consumers were adopting a more cautious approach towards finances amid prevailing economic uncertainty and moderating income prospects. Although borrowing intentions declined as most consumers exercised greater prudence and selectivity in taking on additional debt, Gen Z¹ continued to demonstrate stronger credit demand than other generations.

Softened Income Outlook and Lingering Financial Concerns Among Hong Kong Consumers

In Q2 2026, Hong Kong consumers showed a more cautious income outlook than last year, shaped by softer reported current earnings and weaker expectations. According to the study, 64% of consumers reported their income was unchanged or had declined over the past three months, up eight percentage points from the same period last year. This moderation is also reflected in consumers’ more conservative expectations, with fewer than half (42%) expecting their income to increase over the next 12 months, down from 49% a year ago. Meanwhile, close to 60% anticipate no change or even a decline in income over the next year – 45% foresee no change and 13% a decrease. This is up from Q2 2025, when 51% of consumers expressed a similar sentiment (38% no change, 14% decrease).

Against this backdrop, financial pressures also remain persistent as respondents identified recession (56%), job security and inflation on everyday goods (both at 55%) in their top three biggest concerns affecting household finances over the next six months. These worries might have been driven by ongoing geopolitical pressures and labour market uncertainty, despite growing economic activities and relatively strong GDP growth of 5.9% in Q1 2026².

Notably, while Hong Kong’s inflation remained moderate at 1.7% from February through April 2026^3,4, nearly one-third (30%) of respondents reported their income is unable to keep pace with inflation, coinciding with upward pressure on international oil prices that led to higher electricity, gas, water and transport costs in the city.

Households Adjust Spending and Cashflows To Manage Higher Living Costs

Despite a year-over-year (YoY) moderation in income growth and persistent financial concerns, more than half (55%) of consumers still expressed optimism about their household finances over the next 12 months. The positive sentiment aligned with a large majority (87%) expecting to pay off all current bills and loans in full, with a remarkable eleven percentage point surge from Q2 2025.

This confidence is likely underpinned by stronger cashflow management and more disciplined spending among Hong Kong consumers. Over the past three months, households have adopted more deliberate budgeting, with over one-third (35%) reporting cutting back on discretionary spending like dining out, travel and entertainment. At the same time, those who said they increased spending in these areas fell from 29% to 21%, while 37% reported increasing contributions to emergency savings.

Looking ahead, a similar prudence is also evident in planned spending. More than one quarter (28%) anticipate higher payments on bills and loans across key categories such as housing, utilities, insurance and credit cards, as well as higher contributions in retirement funds and investments over the next three months. Meanwhile, 27% expected a rise in medical care and services costs, suggesting a stronger focus on essential consumption needs. These were the categories that consumers said they would increase spending on the most in the short term. At the same time, consumers continued to show greater caution towards big-ticket items such as cars and appliances, with 38% planning to scale back large purchases, the highest percentage decrease among categories analysed.

“While Hong Kong's overall economic performance remains comparatively strong, a more guarded income environment and persistent cost of living pressures, along with the potential for rising household expenses amid evolving macroeconomic conditions, continue to weigh on consumer sentiment,” said Weihan Sun, senior director of research and consulting for Asia Pacific at TransUnion. “What stands out in this environment, however, is the sustained financial discipline evident across households. Consumers actively review and adjust their financial arrangements in response to emerging concerns. This prudent, forward-looking approach directly reinforces financial resilience and represents a genuinely encouraging sign for the broader consumer outlook.”

New Credit Demand Retreated Amid Heightened Caution

Hong Kong consumers’ prudent financial management also extended to their approach to credit. In Q2 2026, consumer confidence in credit access remained strong, with 57% agreeing they had sufficient access to credit and lending products, slightly up from 55% a year earlier. Meanwhile, 67% believed they would be approved for a credit or lending product if needed, rising from 63% in Q2 2025. However, this positive sentiment did not translate into stronger borrowing appetite, as intentions to apply for new credit or refinance fell sharply to 27%, down 15 percentage points YoY. The decline indicates that Hong Kong households have become more selective and cautious about taking on additional debt.

This retreat in credit demand also reflected a drop in the perceived importance of credit. The share of consumers who view credit and lending product access as extremely or very important in achieving their financial goals eased slightly to 51% from 56% a year ago. Millennials and Gen X recorded the largest declines in perceived importance, while Gen Z remained comparatively resilient, with 61% still viewing credit as extremely or very important, reinforcing younger consumers’ continued appetite for credit to achieve financial mobility.

In terms of product preference, among those who planned to seek credit in the next year, borrowing remained concentrated in consumption-led unsecured products: 51% intended to apply for a new credit card, 28% planned to use buy now, pay later payment services (known as interest-free instalment payment plans in Hong Kong) and 27% expected to request credit line increases.

“Although overall credit intentions have eased, as reflected in the latest Consumer Pulse Study, sustained engagement among Gen Z and continued interest in consumption-led unsecured products show that credit has not lost its relevance,” said Sun. “Rather than framing credit as something to be avoided entirely for prudent financial management, responsible use is the key to preserving its value as a practical resource, especially in times of uncertainty. This approach begins with a clear understanding of one’s credit health, with regular review as the foundation, so that consumers can make more confident, informed financial decisions and prepare for any unexpected shocks, ultimately strengthening long-term household financial resilience.”

TransUnion’s Q2 2026 Consumer Pulse Study consisted of a survey of 973 adults aged 18 and older residing in Hong Kong between 29 April and 10 May 2026. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt and identity theft. For more information, please view the full Consumer Pulse Study Q2 2026 Report.

¹ Generations are defined in this research as follows: Gen Z, 18–29 years old; Millennials, 30–45 years old; Gen X, 46–61 years old; and Baby   Boomers, age 62 and above

² Hong Kong Economy: Latest Developments

³ News.gov.hk: Inflation at 1.7% in Feb

⁴ News.gov.hk: Apr inflation holds at 1.7%

• Despite labour market challenges, over half of Hong Kong consumers (55%) reported stable earnings over the past three months
• Cost of living remained the major concern, with consumers prioritising emergency funds and retirement savings while planning to tighten discretionary spending ahead of the upcoming holiday season
• Consumer sentiment toward credit changed in Q4 2025, with fewer viewing it as important for achieving financial goals

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q4 2025. The report revealed that despite ongoing labour market pressures, Hong Kong households continued to be resilient, with stable incomes underpinning cautious optimism and disciplined financial management. At the same time, consumers’ attitudes toward credit shifted amid an evolving macro-economic backdrop, with borrowing no longer regarded as a lifeline but a considered choice.

Stable incomes persisted despite labour market headwinds

While Hong Kong’s labour market came under pressure with unemployment hitting a three‑year high¹ and youth joblessness elevated to 8% by the end of Q3 this year², most families kept earnings intact in Q4 2025. Over half (55%) of Hong Kong consumers reported that their income stayed the same over the past three months, up three percentage points from last year. The proportion of surveyed respondents experiencing income decline over the same period eased to 12%, down from 14% a year ago. This pattern suggested that household earnings have flattened rather than fallen, indicating income stability among most Hong Kong families.

Meanwhile, Hong Kong’s broader economy held steady, with GDP expanding at 3% or more in each of the first three quarters of 2025³. In this two‑speed economy, marked by solid output alongside a softer job market, consumers remained relatively confident about income prospects heading into 2026. A strong majority (87%) expected their income to increase or stay stable over the next 12 months, including nearly half (43%) who anticipated growth. These findings underscore that Hong Kong households are weathering economic uncertainties better than the headlines imply.

Consumers approaching holiday season with financial discipline and cautious confidence

In Q4 2025, income stability eased financial pressure for many households. Only a small minority (12%) expected that they would be unable to pay at least one of their current bills and loans in full, down from 20% a year ago and the lowest level in five quarters. This significant improvement aligned with a modest rise in optimism, as 54% of respondents expressed confidence in their financial outlook for the year ahead, up two percentage points from the same period last year. It signals a slight but clear shift that fewer households face immediate financial stress and are gradually becoming more forward‑looking.

However, the cost of living remains the primary pressure point for consumers. Six in ten (61%) respondents identified inflation on everyday goods as their top worry affecting household finances over the next six months, closely followed by job stability (60%). Notably, 42% said they felt moderately to very concerned about the impact of current or potential international trade tariffs on their household finances, while 48% pointed to rising product prices as the primary impact of tariffs.

In response to this mixed sentiment, consumers adopted a pragmatic approach to spending through Q3 2025 and carried it into year-end, reflecting greater financial discipline and heightened risk awareness. Over the past three months, 38% of consumers prioritised building emergency funds, while 20% increased their retirement savings. Looking ahead to the holiday season in coming months, only one in four (25%) planned to increase discretionary personal spending on dining, travel and entertainment, while 41% intended to tighten. This prudent management allows Hong Kong consumers to manage the tension between macro easing (positive income outlook) and micro strain (cost of living), while remaining quietly confident in their ability to navigate the future.

“With a majority of Hong Kong consumers reporting income stability despite economic headwinds such as rising unemployment, many households remain relatively optimistic,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “Balancing macro easing and micro strain, consumers are staying grounded and are reinforcing their resilience by strengthening financial buffers and exercising caution in near-term spending. The dual focus on disciplined saving and prudent consumption, particularly ahead of the holiday season, reflects a pragmatic approach to navigating potential inflationary pressures as households prepare for the year ahead.”

Credit sentiment shifted among consumers, with fewer viewing it as important for achieving financial goals

The study also revealed a notable change in consumer attitudes toward credit in Q4 2025. Less than half (48%) agreed that access to credit and lending products is very or extremely important for achieving their financial goals, down from 53% in Q4 2024. This shift was most evident among Gen Z⁴, where the share declined sharply from 70% to 54%.

Additionally, confidence in approval prospects also weakened among the youngest generation surveyed, with just 61% believing that they would be approved for a credit or lending product when needed, representing a notable 15 percentage point drop year-on-year (YoY). This underscores how higher borrowing costs and tighter employment conditions may have reshaped consumer sentiment toward credit, especially among young consumers.

“According to the latest Consumer Pulse Study, fewer consumers see credit as essential to their financial goals. Credit is now considered a calculated choice rather than a lifeline, shifting from necessity to negotiation. To better serve these consumers, lenders should focus on delivering more personalised solutions tailored to diverse needs, while maintaining streamlined processes and accessible engagement channels that enhance the overall experience,” said Sun. “Equally important is ongoing education on proactive credit monitoring to help consumers better understand their financial standing and support access, especially as younger generations show declining confidence in obtaining credit when needed. After all, when managed responsibly, credit remains a powerful tool for financial flexibility amid uncertainties and unlocking more opportunities across life stages.”

TransUnion’s Q4 2025 Consumer Pulse Study consisted of a survey of 979 adults 18 years of age and older residing in Hong Kong between 25 September and 6 October 2025. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the full Consumer Pulse Study Q4 2025 Report.

¹ Census and Statistics Department: Table 210-06101: Statistics on labour force, employment, unemployment and underemployment

² Census and Statistics Department: Table 210-06103: Unemployment rate and underemployment rate by age and sex

³ Census and Statistics Department: Table 310-31001: Gross Domestic Product (GDP), implicit price deflator of GDP and per capita GDP

⁴ Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby   Boomers, age 59 and above
 

Insights from the TransUnion (NYSE: TRU) Hong Kong Industry Insights Report for Q3 2025¹ show that the volume of credit card originations (new accounts opened) declined by 23.5% year-over-year (YoY) in the second quarter of 2025², with volumes down across all generations and all risk categories apart from subprime³. This was the most significant drop in new credit card originations since the COVID-19 pandemic and follows a 13.0% YoY decline in enquiries in the quarter.

Credit card originations among Gen Z⁴ consumers – who have for years seen significant YoY card growth as their over-18 population numbers increased – decreased by 11.1% YoY. Originations among Millennials decreased 25.8% YoY, and Gen X originations were down by 26.1%. Across the risk tier distribution, subprime was the only tier that recorded a marginal increase in volume (+0.5%), albeit off a low base of the total population accounting for just 1.1% of total originations. Within the subprime tier, growth was driven by money lender card issuers, where volume increased 39.4% YoY. Money lenders have a greater risk appetite than traditional banks and provide an alternative when the market is experiencing a gap between demand and supply among higher-risk borrowers.

This cooling in the Hong Kong credit card market has likely been influenced by the unemployment rate being at its highest level since August 2022, at 3.9%⁵ in Q3 2025, with the labour market affected by economic restructuring and weaker hiring in the construction, finance and social sectors. Graduates entering the market have been the most affected, with 8% of young consumers aged 20 to 29 unemployed – the highest level this year, on an upward trend from 5.4% in January 2025⁶.

In contrast to the slowdown in card market activity, the economy experienced a more positive backdrop of softer food and durable goods prices and stronger GDP growth of 3.8%⁷ YoY. This growth was supported by strong visitor arrivals (up 13.9%)⁸ and robust growth in food, beverage and valuable gift categories⁹, along with steady leasing activity and moderate rental increases¹⁰.

In addition to these positive trends, S&P Global Market Intelligence¹¹ forecasts a gradual decline in the unemployment rate in 2026, potentially dropping to 3.44% on a seasonally-adjusted basis by the end of the year, which could spur a recovery in credit card demand. S&P Global Market Intelligence also anticipates positive GDP growth through 2026 and a modest rebound in retail spending next year after resuming YoY growth in the second quarter of 2025.

The anticipated improvement in the economic environment, as well as a 7% YoY increase in enquiries (credit demand) observed in Q3 2025, may help drive an increase in new credit activity in the last quarter of 2025. This is supported by findings in the Q3 2025 Hong Kong Consumer Pulse Study, where 48% of surveyed consumers said that they plan to apply for new credit or refinance existing credit within the next year – a 10% YoY increase.

“We have seen a sharp contraction in credit card originations as consumer demand has softened and lenders have shifted their strategies in response to some challenging economic indicators. However, pockets of opportunity remain for lenders who are positioned to respond to Hong Kong’s anticipated moderate sustained growth in the coming months and through the upcoming peak shopping seasons,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “Gradual improvements in consumer confidence, along with improved business sentiment, will likely support a rebound in demand for credit cards among consumers, along with greater appetite from lenders who wish to resume growth.”

Personal Loans’ Growth Skews Younger and More Digital

Lenders have expanded personal loan originations for three consecutive quarters, with younger borrowers driving higher activity. Total personal loan originations increased by 1.2% YoY in Q2 2025, with the average new loan value remaining steady. However, younger borrowers drove the majority of the activity, with originations among Gen Z consumers up by 14.0% YoY and Millennials up 1.3%. Gen Z borrowers accounted for 16.7% of personal loan originations, up from 14.7% one year ago, indicating their growing preference for this product as well as the continued expansion in the number of Gen Z consumers who are of credit-eligible age (18+).

Amid the mixed macro-economic conditions, traditional lenders remained cautious, with personal loan originations from traditional banks declining by 5.0% YoY with those from money lenders having grown marginally by 1.0%. However, personal loan originations from digital banks grew by 35.0% YoY, albeit off a small base. Digital banks accounted for 7.7% of personal loan originations during the quarter, up from 5.8% one year ago.

TransUnion’s recent study of wallet diversity among Hong Kong consumers found that consumers intending to expand the credit products they held beyond just credit cards were most likely to open new personal loans for that first additional product. The study also found that 58% of consumers who opened a personal loan as their first non-credit card product did so with a lender who was already represented in their wallet.

“Younger consumers are showing more interest in personal loans as their preferred product for addressing short-term credit needs for larger purchases, such as new appliances, or even for home improvements as Hong Kong’s property market becomes more accessible. Digital banks are responding to this demand, with their streamlined digital experiences addressing young consumers’ needs and preferences,” said Sun. “This trend also reflects a potential shift away from Hong Kong’s card-dominated credit market, as consumers increasingly understand that they can benefit from participating in diverse credit portfolios that best suit their life stage and financial needs. The key for sustainable growth for the Hong Kong credit ecosystem is to identify consumer preferences; address those needs responsibly; and help them manage through their life stages proactively."

Q3 2025 Metrics for Consumer Credit Products in Hong Kong 

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 an account-level up to 150 days past due, excludes 150+ days past due and charge-offs.

“In the coming months, lenders in Hong Kong seeking to expand their portfolios can focus on more considered segmentation to identify and engage with resilient consumers. Previous experience shows that neither ‘blanket’ acquisition campaigns aimed at all consumers regardless of risk tier or need, nor shutting down credit access in times of economic headwinds, contribute positively to growth – a more considered and personalised approach will yield more profitable and sustainable results,” said Sun.

1 TransUnion's third Industry Insights Report for Hong Kong in 2025 is based on data from the Credit Reference Platform under Credit Data Smart (CDS), following the full migration by the end of November 2024. Future reports will continue to leverage data from this source

2 Origination figures are reported three months in arrears due to reporting lag

3 TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

4 Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964 

5 Census and Statistics Department: Unemployment and underemployment statistics for July – September 2025 

6 Trading Economics: Hong Kong Youth Unemployment Rate

7 Hong Kong Economy: Latest Developments

8 CBRE: Hong Kong Figures – Retail Q3 2025

9 Government of the Hong Kong Special Administrative Region: Provisional Statistics of Retail Sales for September 2025

10 Midland Realty: Private residential rents rose further in June and are expected to reach a new peak in Q3 (only available in Traditional Chinese)

11 S&P Global Market Intelligence shared subscription-based data with TransUnion Hong Kong

• Prevailing economic uncertainties prompted cautious income growth expectations across generations over the next 12 months
• Inflation of everyday goods, economic slowdown and job security were the top three concerns affecting household finances cited by consumers
• More consumers planned to apply for or refinance credit, but accessibility gaps remained especially for older cohorts

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q2 2025. The report revealed that financial confidence among Hong Kong consumers remained cautious and hard-earned. In the face of a complex economic environment, consumers were adjusting their budgeting behaviours through a dual-track approach of short-term caution with long-term planning to enhance financial resilience. While consumers exhibited a greater appetite for credit during times of uncertainty, perceived access still varied by generation, with Gen Z feeling better served than the older cohorts.

Macroeconomic uncertainties likely hampered confidence in income growth prospects

In Q2 2025, 44% of surveyed consumers in Hong Kong reported an increase in income over the past three months, which is a significant improvement from 29% recorded in the same period last year. This upward trend was observed across all generations (Gen Z, Millennials, Gen X, and Baby Boomers)¹, with Gen Z leading the way as 56% reported an income boost, marking a substantial year-over-year (YoY) increase of eleven percentage points.

However, confidence in future income growth appeared to have been dampened by macroeconomic uncertainties. Fifty-two percent of Hong Kong consumers anticipated that their income would either remain the same or decrease over the next 12 months. When asked about their top financial concerns during the same period, many cited the ongoing global tariff war.

This cautious sentiment was particularly prevalent among Millennials, Gen X, and Baby Boomers. In stark contrast, 60% of Gen Z consumers expected their income to increase in the year ahead, reflecting that financial progress remained evident within certain segments, which are often led by younger earners carving their own paths.

Financial pressures drove strategic budget adjustments among consumers

According to the study, respondents saw inflation of everyday goods (57%), economic slowdown (55%), and job security (54%) as the biggest concerns affecting household finances over the next six months. These concerns reflect the rise in the territory’s inflation rate during the first five months of the year², and the upward trend in unemployment since February 2025³. Against this economic backdrop, nearly a quarter (24%) of consumers anticipated difficulties in paying at least one of their current bills and loans in full, up from 20% a year ago.

Alongside financial uncertainties, a notable shift in household budgeting behaviour was observed. Over the past three months, 39% of consumers reported cutting back on discretionary spending such as dining out and travelling, indicating a short-term solution to immediate potential financial pressures. Meanwhile, 39% reported saving more for emergencies, 25% increased retirement contributions, and 20% accelerated debt repayment, reflecting a focus on long-term financial resilience.

While challenges remain, the local market continues to exhibit some encouraging signs, including heightened activity in the property sector and significant growth in the stock exchange, particularly with a rebound in IPO activities⁴. Additionally, interest rates in Hong Kong are projected to stay low, and further US interest rate cuts⁵ are anticipated in the second half of 2025.

“Despite ongoing economic uncertainties, Hong Kong consumers are demonstrating a pragmatic and resilient mindset, balancing short-term caution with long-term financial planning. It is clear that consumers are adapting to financial uncertainties through prudent strategies such as increased emergency savings and accelerated debt repayment, which are likely to foster greater financial resilience,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “These insights underscore the importance of tailored financial solutions that support consumers across generations as they navigate an evolving economic landscape.”

Credit inclusion improved but access and ease still trail behind demand

In addition to cautious financial strategies, consumers increasingly saw access to credit as essential for achieving financial mobility, particularly during times of uncertainty. A strong majority (96%) agreed that credit and lending product access is important for achieving their financial goals. This sentiment was reflected in consumers’ borrowing intentions, with 42% planning to apply for or refinance credit in the coming year, up from 30% in Q2 2024. While demand is expected to grow further as interest rates decline, a notable increase in credit interest was seen among older cohorts, as Gen X (45%) and Baby Boomers (28%) showed increasing intention to seek new credit over the past five quarters.

Despite rising demand, less than half of Gen X and Baby Boomers (48% and 44% respectively, compared to 55% overall) believed that they have sufficient access to credit and lending products, indicating that access barriers remain. Additionally, 42% of consumers ultimately abandoned their credit application or refinancing plans, primarily due to high costs (30%), burdensome processes (30%), and long decision times (28%). These challenges present clear opportunities for lenders to enhance the overall credit journey and better serve unmet demand.

Adding to this, while 63% of consumers believed they would be approved for a credit or lending product when needed, more than one quarter (27%) still did not know their credit score. This gap underscores how limited credit awareness may hinder consumers’ efforts to maintain credit health and potentially lead to misconceptions about their financial readiness.

“The vast majority of consumers view credit as essential to achieving their financial goals and they plan to engage with credit more than ever in the year ahead,” said Sun. “Yet, a noticeable gap remains between demand and perceived access, with older generations reporting greater challenges. To bridge this gap, lenders could streamline processes and design more inclusive solutions that reflect the diverse needs across age groups. At the same time, with over one in four consumers unaware of their credit score, it is clear that improving credit awareness and encouraging proactive credit health management are critical in helping them to unlock more financial opportunities.”

TransUnion’s Q2 2025 Consumer Pulse Study consisted of a survey of 968 adults 18 years of age and older residing in Hong Kong between 5 May and 15 May 2025. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the full Consumer Pulse Study Q2 2025 Report.

¹ Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby   Boomers, age 59 and above

² Census and Statistics Department: Consumer Price Indices for May 2025

³ news.gov.hk: Jobless rate rises to 3.5%

⁴ The Hong Kong Monetary Authority: Recent dynamics in the Hong Kong dollar market

⁵ The Hong Kong Monetary Authority: HKMA’s Response to US Fed’s Interest Rate Decision

Research launched in December 2024 by TransUnion reveals that nearly half (44%) of the surveyed consumers in Hong Kong were targeted by fraud through online, email, phone call or text message channels in the last three months². In response, ZA Bank is making the Credit Alert Service accessible to all its users, enhancing value and empowering them to protect themselves from rising fraud risks. 

Through this service, users will receive instant alerts via the ZA Bank App that notify them of critical changes to their credit report, including: 

• New credit report enquiries³ 
• New credit accounts opened under their name 
• Changes to addresses or phone numbers 

Devon Sin, Alternate Chief Executive of ZA Bank, said: “ZA Bank is proud to be the first bank in Hong Kong to offer the comprehensive TransUnion Credit Alert Service for free, removing the cost barrier for a vital fraud protection tool. This partnership with TransUnion reflects our commitment to leveraging innovation to protect our users’ financial well-being, especially as digital fraud continues to rise in Hong Kong. By integrating this feature into our app, we are not only enhancing security but also promoting financial inclusion to ensure more people have access to tools that safeguard their finances.” 

Wingo Wong, Managing Director of TransUnion Credit Information Services Limited in Hong Kong, said: “For years, TransUnion has been at the forefront of fraud protection, pioneering efforts to enable individuals to identify risks earlier and minimise potential losses. As digital fraud continues to rise in Hong Kong, we are delighted to partner with ZA Bank to expand our Credit Alert Service to its users. This partnership underscores the importance of collaboration between businesses and consumers in combating this escalating threat. Together, we are committed to empowering Hong Kong consumers in the fight against fraud in an increasingly digital world.” 

1 As the first digital bank to launch in Hong Kong (previously named “virtual bank”), ZA Bank had the highest number of users and customer deposits among the city’s eight digital banks as of 30 June 2024. Source: Interim reports of 8 digital banks 

2 TransUnion: Consumer Pulse Q4 2024, Dec 2024 

3 Currently only new enquiries raised through TransUnion Credit Information Services Limited by banks or financial institutions are included, and new enquiries raised through other credit reference agencies will be available gradually

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q4 2024, which revealed that more than half (52%) of Hong Kong consumers were optimistic about their household finances in the next 12 months – the highest rate in 2024. The majority (44%) of consumers anticipated an income rise, most notably among Millennials (rising from 40% last year to 51%), with 42% of consumers saying that they expected income stability in the next year. The study also showed that proactive credit monitoring will be crucial for empowering Hong Kong consumers to manage their credit health, as awareness of the importance of credit and improved access to it both grow.

Increased optimism for household financial outlook fuelled by income gains

In the latest study, over one-third (34%) of Hong Kong consumers in Q4 2024 reported an increase in household income over the last three months. Notably, Gen Z led this trend among the four surveyed generations (Gen Z, Millennials, Gen X, and Baby Boomers)[1], with nearly half (49%) of them reporting income gains, the highest of any group despite a decrease from last year (57% in Q4 2023). Millennials showed significant improvement with 40% disclosing an income increase, marking the highest percentage since Q4 2023. Building on the positive trend of income increases reported last quarter, over half (52%) of the respondents indicated that their income levels remained unchanged in Q4 2024, suggesting a stable income for the majority.

Consumers’ outlook remained upbeat, with 86% anticipating their income to increase or to remain stable over the next 12 months. This confidence is particularly pronounced among younger generations, suggesting a positive shift in their financial situations. Specifically, 51% of Millennials expected a boost in their earnings, a significant increase from 40% at the same time last year. Moreover, more than half (53%) of Gen Z expected an income increase as well, although this figure is lower (68% in Q4 2023) year-over-year (YoY).

Riding on these positive trends in income and anticipated future earnings, around 52% of consumers expressed optimism about their household financial outlook for the upcoming year, up from 46% in Q4 2023. This shift is likely influenced by the improved performance of the local stock market, heightened economic activities and an interest rate cut by the Hong Kong Monetary Authority (HKMA) in September 2024[2], which may have helped ease financial burdens. Additionally, this positivity could also be attributed to consumers’ enhanced capabilities in managing current financial obligations as 80% of consumers expected to be able to pay their current bills and loans in full, an improvement from the 74% who said the same last year.

Sustained consumption confidence throughout upcoming holiday seasons

Despite a growing optimism about future earnings and financial outlook, consumers indicated they have strategically adjusted their household budget to safeguard their financial health amid potential economic challenges, such as inflation and job insecurity (57% and 54% cited these as their top three household finances concerns respectively). While a significant 41% remained cautious about making large purchases, it’s noteworthy that one-third (33%) of consumers anticipated increasing their discretionary spending on dining, travel and entertainment in the next three months as the festive holiday season approaches. This reflects the ongoing consumption confidence among Hong Kong consumers towards the traditional year-end retail peak.

“Our latest Consumer Pulse Study for Q4 2024 reveals an encouraging outlook on household financial dynamics in Hong Kong. With positive trends in income and future earnings anticipated, there is an increasing sense of optimism regarding financial stability, especially among younger generations. As 2024 draws to an end, Hong Kong consumers are planning to increase their spending on dining and travel while also actively prioritising other prudent measures to ensure financial resilience. This forward-thinking mindset is a promising sign for the market as we head into the new year," said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion.

Credit monitoring vital amid improving credit perceptions and growing confidence in credit access

The Q4 study also highlighted encouraging trends in consumer awareness of the importance of credit access and lending products. Not only did 84% of consumers acknowledge the importance of having access to credit and lending products in achieving their financial goals, but perception also improved, with 54% of consumers feeling they had sufficient credit access, marking a seven-percentage point jump from last year.

Notably, two-thirds (67%) of Gen Z respondents believed they had adequate access and 75% were confident their credit application would be approved if needed. More than half (57%) of Millennials believed they had adequate access, while 71% were confident that their credit would be approved. Among those seeking new credit in Q4 2024, credit cards emerged as the top choice at 41%, followed by personal loans at 26% and buy now pay later payment services (known as interest-free instalment payment plans in Hong Kong), at 25%.

With these positive signs of credit recognition, perception and accessibility, effective management of credit health becomes imperative. While a majority of consumers (80%) acknowledged the importance of monitoring their credit reports, more than one quarter (27%) said that they did not monitor their credit reports at all. This lack of vigilance might be concerning particularly for the younger generations who have shorter credit histories and less experience in long-term credit health management.

“Actively managing credit health and monitoring credit reports are foundational to accessing credit and lending products. It is clear that improving education about credit monitoring is essential for enhancing financial literacy among consumers in Hong Kong,” said Sun. “While we encourage consumers to monitor their report regularly, the Credit Data Smart (CDS) initiative, implemented by the Industry Associations[3], allows each consumer to receive a free credit report from TransUnion once every 12 months. We believe this is a good starting point for consumers to build a regular credit monitoring habit, ultimately empowering them to achieve important life goals by unlocking more opportunities via responsible access to credit.”

TransUnion’s Q4 2024 Consumer Pulse Study consisted of a survey of 1,000 adults 18 years of age and older residing in Hong Kong between 25 September and 5 October 2024. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the full Consumer Pulse Study Q4 2024 report. 

1 Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby   Boomers, age 59 and above

2 The Hong Kong Monetary Authority: Adjustment of Base Rate, Sep 2024

3 The Hong Kong Association of Banks (HKAB), The DTC Association (The Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies), and the Hong Kong SAR Licensed Money Lenders Association Limited are collectively known as "Industry Associations" 
 

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q3 2024 which shows that many Hong Kong consumers expressed a promising financial outlook. In the TransUnion survey of adult Hong Kong consumers in Q3 2024, a growing number of those surveyed (35%) reported that their household income had increased in the last three months – a significant seven-percentage point year-over-year (YoY) jump from Q3 2023.

This optimism is most pronounced among Gen Z¹ consumers, with more than half (55%) indicating an increase in income, compared to 45% in Q3 last year. At the same time, this age group showed a significant drop from 41% to 30% from Q3 2023 to Q3 2024 in those who reported their income stayed the same in the past three months. All these insights indicate that there is a shift among younger consumers toward greater financial mobility.

Looking ahead, growing confidence in future earnings persists among Hong Kong consumers. In Q3 2024, 42% of all respondents anticipated their income will increase over the next 12 months, up seven-percentage points YoY. Conversely, the percentage of consumers expecting an income decrease in the next year dropped three-percentage points YoY to 15%.

Cautious optimism with mixed sentiment

Despite the positive sentiments about income, Hong Kong consumers expressed mixed views about their financial outlook. One quarter (25%) in Q3 2024 said they won’t be able to pay at least one of their current bills and loans in full, up from 17% YoY. This shift highlights a potential growing anxiety about financial stability among consumers, which could be influenced by external economic factors such as inflation and market fluctuations. Although the Hong Kong Monetary Authority (HKMA) has recently reduced the city’s base rate following the decision of the US Federal Reserve², consumers will need to remain resilient and patient until potential further cuts to make the cost of credit more manageable, particularly for borrowers who are struggling. 

To better understand these nuanced consumer sentiments, TransUnion asked respondents to point out their biggest household financial concerns for the next six months. The results show that inflation for everyday goods is the leading concern, with 60% citing it in their top three biggest concerns affecting their household finances in the next six months, followed by a recession (58%) and jobs (49%). Digging a little deeper into the recession concerns, 44% of those surveyed believe Hong Kong is currently in a recession, a five-percentage point increase from the previous quarter.

With concerns around recession and inflation high, 39% of consumers said they saved more in an emergency fund and 23% increased their retirement savings in the past three months, indicating a shift towards prioritising financial security amidst uncertainty. These consumers are well-positioned to benefit from the higher interest rates in Q3 2024, especially in fixed deposits, where recent rate cuts have not affected returns. Consumers also anticipate more controls in spending, with 40% saying that they plan to reduce discretionary spending such as dining out, travel and entertainment. This cautious sentiment is reflected in a 10% YoY decline in business for Hong Kong restaurants during this year’s Mid-Autumn Festival³. 

“Our latest Consumer Pulse Study for Q3 2024 reveals a complex landscape with cautious optimism among Hong Kong consumers. While there is a notable increase in income and confidence especially among the younger generation, we also see rising concerns about financial stability. However, the proactive steps consumers are taking – including prioritising savings and adjusting their spending habits – demonstrate their commitment to maintaining financial resilience in the face of potential uncertainties. This adaptability is a positive sign for a mature market," said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.

Stronger credit demand anticipated

In a time of economic uncertainty, the flexibility offered by credit is one of the important opportunities to support financial resilience. In fact, 51% of consumers said having access to credit and lending products is extremely or very important to achieve their financial goals, an increase from 47% in Q3 2023.

Consumers expressed higher interest in credit in Q3 2024, with 38% of respondents saying that they plan to apply for new credit or refinancing existing credit, in the next year, compared to 35% in Q3 last year. Among those who plan to apply for new credit or refinancing existing in the next year, 45% said they’ll apply for a new credit card, and nearly one quarter (23%) will request an increase in available credit for an existing credit card. More than one third (34%) said they’ll apply for a new personal loan and 18% are planning to refinance a personal loan. Gen Z showed the strongest appetite for credit, with close to half (48%) saying they’ll apply for new credit or refinance existing credit in the next year – up from 43% one year ago, while 41% of Millennials, 38% of Gen X and only 13% of Baby Boomers expressed similar plans. With the recent September rate cut, a further uptick in credit activities is expected, as such cuts historically lead to increased borrowing.

The demand for new mortgages increased significantly in Q3 2024 compared to the same time last year. Among Hong Kong consumers who plan to apply for new credit or refinancing existing credit in the next year, one in five (20%) said they’ll plan to apply for a new mortgage, up from 14% a year ago and from 13% in Q2 2024. This increase is a positive sign for the property market and comes following the introduction of countercyclical macroprudential measures for property mortgage loans by the HKMA in February this year⁴.

Despite this appetite for credit, in Q3 2024 more than one third (34%) of consumers said they considered applying for new credit or refinancing existing credit, but ultimately decided not to, an increase from 30% a year ago. The reasons for this abandonment are multifaceted, with 26% citing the cost of new credit or refinancing being too high, another 26% indicating that it takes too long to get a decision, and similarly 26% saying it took too much work to apply. Additionally, 24% of respondents reported finding an alternative funding source.

 “The positive outlook on household income, along with cautious consumer sentiment and an anticipated lower interest rate environment, creates a promising landscape for growth in Hong Kong’s credit market. The increasing demand for new credit products, particularly among Gen Z consumers, presents exciting business opportunities for financial institutions,” said Sun. “However, challenges remain that can impede consumers from applying for new credit. We urge lenders to actively address these barriers to empower more consumers to explore credit options while at the same time enhancing financial inclusion.”

TransUnion’s Q3 2024 Consumer Pulse Study consisted of a survey of 860 adults 18 years of age and older residing in Hong Kong between 15–31 July, 2024. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the Consumer Pulse Study Q3 2024 Infographics. 

1 Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby Boomers, age 59 and above.

2 The Hong Kong Monetary Authority: Adjustment of Base Rate, Sep 2024

3 RTHK: Restaurants expect 10pc drop in Mid-Autumn sales, Sep 2024

4 The Hong Kong Monetary Authority: Countercyclical Macroprudential Measures for Property Mortgage Loans, Feb 2024

Global information and insights company and Hong Kong’s leading credit reference agency, TransUnion (NYSE: TRU), today released its Consumer Pulse Study for Q2 2024 which shows that less than one-third (29%) of surveyed Hong Kong consumers said that they had had increases in household income in the previous three months. This was a notable 13 percentage point year-on-year (YoY) decrease from 42% in the same quarter last year. While this decline in income may be of concern for stakeholders, the study also finds that consumers were more proactive in their personal finance management in the face of greater economic uncertainties.    

Cuts to discretionary spending as consumer optimism cools

In Q2 2024, less than half (44%) of the surveyed consumers said that they were optimistic about their household finances over the next 12 months, down from 62% in the same quarter last year. Additionally, 20% of respondents indicated they expected to be unable to pay any of their current bills and loans in full, up three percentage points from Q2 2023. Younger cohorts appeared to be more vulnerable with 23% of Gen Z¹ consumers reporting that they could not pay their bills and loans in full.

 Looking into the top concerns affecting household finances in the next six months, 60% of consumers said that they were worried about the inflation of everyday goods (groceries, gas, etc.), followed by 57% who reported being concerned about a possible recession, and 53% said that they were uneasy about job security.

 “The decline in optimism about household finances is a concerning trend. The latest data from TransUnion’s Consumer Pulse Study reveals that consumer sentiment is cooling. The vulnerabilities of Gen Z in managing their debt is a wake-up call for borrowers and lenders, and it shows a clear need to improve financial literacy among younger generations,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.

With these potential economic challenges in mind, consumers are taking a more cautious approach to their financial management. Looking ahead, 41% of consumers expected large purchases for appliances and cars to drop over the next three months. Furthermore, at least one in three (37%) expected further decreases in discretionary spending, and 36% expected a drop in online and in-store retail purchases. These insights suggest that consumers are adapting their spending to weather anticipated economic turbulence.

Stronger appetite for new credit from Gen Z and consumers with moderate risk

In times of economic uncertainty, access to credit and lending products helps provide financial stability for many consumers. Across all generations, more than two-thirds still believed access to these financial tools is at least moderately important. Looking at new credit, 30% of consumers expressed interest in applying for new credit or refinancing existing credit over the coming year. Gen Z consumers (36%) showed stronger interest followed by Millennials (35%), Gen X (28%) and Baby Boomers (17%). Among those planning for new credit activities, 49% intended to apply for a new credit card, 30% a new personal loan, and 28% a limit increase on an existing card.

The study also found a considerable increase in demand from moderate risk2 consumers compared to the same quarter last year. While self-reported super prime consumers planning to apply for new credit dropped five percentage points from last quarter to 29%, prime (59%) and near prime (50%) consumers with plans for new credit recorded a significant YoY increase, up 27 and 14 percentage points respectively from Q2 2023.

The number of self-reported subprime consumers who said that they would be interested in new credit or refinancing existing credit dropped considerably YoY from 70% to 55%. Considering the 35% increase in bankruptcy petitions recorded by the Official Receiver's Office in May this year from a year ago³, financial institutions should still carefully evaluate subprime consumers’ appetite for new credit. 

Though considering new credit, more than a quarter (28%) of surveyed consumers had abandoned plans to apply for new credit this quarter. The primary reason for this decision was the high costs associated with new credit and refinancing activities (32%), followed by burdensome application processes (27%).

Growing awareness of digital fraud attempts

With an increasing range of channels and services to support digital payments, online transactions have become a significant part of consumer behavior in Hong Kong. In Q2 2024, 50% of consumers indicated that they conduct at least a quarter of all their transactions online, with one in six (16%) even conducting more than 50% of their transactions online. Alongside the growth of digital payments is a corresponding increase in consumer awareness of fraud. 

 In the last three months, fewer consumers (56%) were unaware of any fraud schemes targeted at them, compared to 60% in the same quarter last year. Meanwhile, 38% reported being targeted by fraud but did not fall victim, which is a five-percentage point increase from 2023. All these indicate a growing awareness towards digital fraud attempts among consumers.

 With rising consumer awareness, concerns about sharing personal information have also increased. Nearly seven in ten (68%) of Hong Kong consumers expressed concern about this, up from 61% in the same quarter last year. The primary reasons for concern included the fear of identity theft (72%), personal invasion of privacy (58%), and receiving unsolicited marketing communications (47%).

 “Consumers are becoming more cautious about how their personal information is handled and shared, demanding greater transparency and security from businesses to keep them away from risks associated with data breaches and identity theft. Businesses need to address consumers’ concerns by introducing robust data protection measures and clear business communications. These are crucial to build consumer trust and encourage more responsible data-sharing practices,” added Sun.

TransUnion’s Consumer Pulse Study surveyed 853 consumers in Hong Kong between 1–13 May, 2024. This quarterly study examines shifting consumer attitudes and behaviours based on the dynamics of income, debt, and identity theft. For more information, please view the full report of the Consumer Pulse Study Q2 2024. 

1 Generations are defined as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby Boomers, age 59 and above.

2 TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

3 RTHK - Bankruptcy petitions rise to two-year high in May