Hong Kong's consumer credit market continued to benefit from improving lender and consumer confidence in the second quarter of 2026, as stronger domestic demand supported balance growth across credit cards and personal loans. New activity reflected a disciplined approach from lenders, with originations increasingly concentrated among lower-risk borrowers, while portfolio performance remained broadly stable to improving.

These insights are drawn from the TransUnion (NYSE: TRU) Hong Kong Industry Insights Report for Q2 2026, a quarter in which GDP grew 4.3%¹, driven by robust exports and resilient domestic demand. Meanwhile residential property prices rose 7.9%² in the first half of the year, reaching their highest level in two and a half years. Consumer confidence also improved, with the value of total retail sales increasing 4.6% year-over-year (YoY)³ in June, led by 20.1% growth in jewellery and valuable gifts and an 11.3% increase in electronic and durable consumer goods.

Credit Card Balances Reflect Renewed Consumer Retail Spending Momentum

Against this positive backdrop, credit card origination volumes rose 6.7% YoY during Q1 2026⁴, with prime plus⁵ consumers recording the highest growth across all risk tiers at 21.1% YoY, followed by super prime borrowers at 6.9%. In addition to strong retail spending and improving macroeconomic conditions, competitive lender promotions during the Chinese New Year holiday season in Q1 also contributed to this growth.

Across generations, Gen Z⁶ accounted for nearly one in four (24.9%) new card originations, up 1.8 percentage points from a year earlier. This aligns with findings from TransUnion’s Q1 2026 Consumer Pulse Study, which showed that among Gen Z consumers intending to apply for new credit or refinance, nearly half (44%) were considering a credit card, up seven percentage points from 2025.

Despite origination growth being driven by consumers in the prime plus and super prime risk tiers, average credit limits on new cards issued declined by 6.3% YoY in Q1 2026, reflecting lenders’ continued underwriting discipline.

Outstanding credit card balances grew 4.3% YoY in Q2 2026, amid sustained consumer spending activity in line with the broader retail trends. Consumers continued to leverage their cards to support consumption needs, driving a 3.4% YoY increase in average balance per consumer.

"Credit card trends in Q2 2026 closely mirror the positive momentum we are seeing in Hong Kong's retail sector," said Weihan Sun, senior director of research and consulting for Asia Pacific at TransUnion. "Lenders continue to meet demand selectively, prioritising lower-risk consumers while maintaining prudent underwriting standards. As consumer confidence improves, capturing and defending share of wallet among prime and above cardholders will be a key opportunity for lenders in the months ahead."

Personal Loan Growth Shifted Towards Higher-Quality Borrowers and Larger Loan Sizes

Although personal loan origination volumes declined slightly by 1.4% YoY in Q1 2026, average loan sizes increased by a significant 9.1% in the same period, driven by greater appetite from larger lenders and a growing share of prime plus and super prime borrowers, whose originations rose 11.7% and 15.5% YoY, respectively. While these better risk tiers still accounted for less than 10% of originations, they contributed disproportionately to the outstanding balance growth of approximately 4.3% YoY, given the larger loan amounts they tend to carry.

While Millennials accounted for the largest share of personal loan originations in Q1 2026 at 42.7%, their strong interest in this product was also reflected in the Consumer Pulse Study. Among Millennials intending to apply for credit or refinance, 42% preferred a new personal loan, up six percentage points from 36% a year earlier, signalling a growing diversification of credit usage among the largest borrower segment beyond credit cards.

Personal loan performance continued to improve across all measures. The largest improvement was seen in consumer-level delinquency, which declined by 7 basis points (bps) YoY to 0.91% (measured as the percentage of consumers with 60 or more days past due, or DPD). The account-level rate decreased by 3 bps to 0.81%, while the balance-level rate fell by 1 bp to 0.52%. This positive trend has been sustained over several quarters, providing lenders with greater confidence to extend credit.

"The personal loan market reflects a meaningful shift in borrower profile," said Sun. "We are seeing greater participation from lower-risk borrowers and proactive lender engagement, supported by improving portfolio performance across all delinquency measures. This combination of quality demand and disciplined supply positions the market well for continued, sustainable growth."

Average Revolving Line Balances Increased Despite Fewer Consumers Carrying Balances

Revolving line activity remained subdued in Q2 2026, continuing a trend of measured market contraction.

Origination volumes in Q1 2026 declined by 7.8% YoY, marking a considerably slower rate of decline than in previous quarters. This sustained contraction in new account originations occurred as the market continued to normalise following the withdrawal of low-limit revolving line products amid elevated delinquencies. With originations now increasingly led by money lenders, whose share increased by 8.2 percentage points YoY, average limits on newly originated accounts grew by 18.4% YoY.

The number of consumers carrying revolving line balances fell 5.5% YoY, while average balances among active borrowers rose 5.9%, indicating continued engagement among consumers who maintain these facilities.

Following several quarters of tightened underwriting by lenders, portfolio performance continued to improve. The account-level delinquency rate (60+ DPD) declined by eight bps YoY, to 0.43%, while consumer- and balance-level delinquency rates fell as well.

Q2 2026 Metrics for Major 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.

“Looking ahead, lenders have a clear opportunity to capture rising organic demand for credit cards from Gen Z consumers, while defending their top-of-wallet position with prime and above borrowers who continue to drive card origination growth. At the same time, growing wallet diversification among Millennials for personal loans is reshaping engagement strategies,” said Sun. “With improving economic conditions and renewed consumer confidence, lenders that can effectively identify and engage these distinct segments through advanced analytics will be best positioned to deliver sustainable growth in the second half of 2026.”

¹ News.gov.hk: Economy grows 4.3% in Q2

² Rating and Valuation Department: Property Market Statistics

³ Census and Statistic Department: Provisional Statistics of Retail Sales for June 2026

⁴ Origination figures are reported three months in arrears due to reporting lag

⁵ TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

⁶ 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