TransUnion Study Reveals Rebounding Personal Loan Market in Hong Kong
Rising rate of delinquency and write-offs tracks growth in money lenders market
TransUnion (NYSE: TRU), a global information and insights company and Hong Kong’s leading credit reference agency, today revealed that the Hong Kong personal loan market has rebounded compared to the previous year with more customers, higher origination volumes and an increase in the total new loan amounts year-over-year (YoY). However, the rising rate of delinquency and write-offs1 for money lenders over the same period also underscores the imperative for strengthened risk management in fostering the continued sustainable growth.
TransUnion drew these conclusions from a study it conducted on the personal loan market between March to August 2023, compared to March to August 2022, across hundreds of financial institutions in Hong Kong. The study shows a 7% increase in origination volumes and a 4% growth in the total new loan amounts in 2023 compared to the same period in 2022.
The trend aligns with improved consumer sentiment regarding the economy shown in TransUnion’s Q3 Consumer Pulse Survey. Conducted in July this year, the survey found the percentage of respondents planning to apply for new credit or refinance existing credit in the next 12 months had rebounded to 35%, reaching its highest level since Q2 2022.
More robust growth for total new loan amount among money lenders
Over the period studied, banks outperformed money lenders in the number of total customers holding personal loans. While banks increased their customer number by 7% YoY, money lenders saw their customer base contract by 1% over the same period. However, both banks and money lenders grew origination volumes (a measure of new loans opened), with banks growing at a slightly faster pace. When comparing total new loan amount, money lenders outperformed banks in the pace of growth.
Table 1: Year-over-Year Personal Loan Growth by Lender Type2
Money lender YoY%
No. of total customers
Total new loan amount (HK$)
Tier 1 and Tier 2 money lenders lead the industry, with Tier 2 shifting to prioritise larger loan sizes3
Within the money lenders segment, large Tier 1 players are leading the market. With a bigger customer base and market size in terms of total new loan amount, Tier 1 money lenders took the largest share of YoY growth in origination volumes (9%).
Tier 2 money lenders follow a different strategy compared to their larger competitors, focusing more on personal loans with a higher ticket size. This resulted in a 27% YoY growth in their total new loan amount, albeit off a much smaller total value – only 17% of that of Tier 1 money lenders.
Table 2: Year-over-Year Money Lender Personal Loan Data Tiered by Loan Amount2
T1 Money Lender YoY%3
T2 Money Lender YoY%3
T3 Money Lender YoY%3
Total new loan amount (HK$)
Rising delinquency and write-offs bring greater risks
Alongside improving consumer sentiment and an increase in origination volumes across the industry, personal loan delinquencies and write-offs also rose among money lenders YoY, bringing more risk to their business. Irrespective of the market size, the escalating risk is pervasive, particularly impacting Tier 2 and Tier 3 money lenders. Annual write-off rates of Tier 2 and Tier 3 money lenders recorded increases of 3.3% and 3.4% YoY, respectively.
Table 3: Year-over-Year Money Lender Personal Loan Perfomance2
60+ Days Past Due (DPD) $ %
Write-offs $ %
“Money lenders, while catering to a comparatively smaller customer base in absolute terms, are demonstrating substantial growth in total new loan amounts. This trend signifies their ability to extend increased lending to a concentrated group of consumers,” said Wingo Wong, Managing Director of TransUnion Credit Information Services Limited.
“With many personal loan providers focused on specific consumer segments, in particularly money lenders, it's important to have advanced and robust risk management capabilities. A forerunner in Hong Kong’s credit economy, TransUnion has decades of experience in the local credit market and is committed to supporting Hong Kong’s financial ecosystem. Our proven industry trusted data, insights, technologies and solutions enable financial institutions to effectively navigate potential risks, today and in the future. These are the tools we use that are the foundations of managing market risks while driving smart business growth,” Wong added.