The newly released TransUnion (NYSE: TRU) Q2 2021 Industry Insights Report shows an improvement in key credit market indicators. This occurred as the Hong Kong economy continued to rebound from the impact of COVID-19, having recorded its second successive quarter of strong GDP growth1. Private consumption, which grew by 6.5% YoY in Q2 2021, was a major contributor to the credit market recovery.
Accompanying the Industry Insights Report, TransUnion also released findings from research presented at its recent Financial Services Summit that showed the shifting dynamics of consumer loyalty in the credit card market and the behaviours of loan on card consumers. These actionable insights are designed to help guide lenders and assist them in making informed lending and account management decisions so they can grow their businesses and better serve Hong Kong consumers.
In the latest quarter, originations—a measure of new accounts opened that is a function of both credit demand and supply—increased year-on-year (YoY) across all major unsecured lending credit categories and were particularly strong for credit cards – up 26%. Unlike other major credit products, credit cards also recorded growth in outstanding balances – up 1% YoY in Q2 2020. This was the first YoY increase since Q4 2019.
This growth in originations suggests consumers are re-engaging in the credit market and are starting to leverage credit again as the economy gains momentum and consumption levels increase.
Hong Kong consumers continued to demonstrate their ability to manage their credit responsibilities well, with improvements in delinquency rates recorded across all the major consumer credit categories. This trend was most pronounced for unsecured personal loans, unsecured revolving lines and credit cards, which recorded YoY improvements of 25, 18 and 11 basis points (bps), respectively.
This general improvement in outlook and performance across the Hong Kong consumer credit market was supported by the findings of the latest TransUnion Consumer Pulse Report2. The Q2 2021 report showed an 11-percentage point decline in the number of people who reported that their household incomes were currently negatively impacted due to the pandemic. Although this still represented a significant 45% of Hong Kong residents, it showed the impact of the pandemic was fading.
“Increased consumer consumption is providing the fuel for a recovery in the consumer credit market and wider economy. Credit cards are the most widely held consumer credit product in Hong Kong. In Q2 2021 we witnessed an important milestone, with a growth in outstanding card balances starting to reverse some of the impacts of the pandemic,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “It is likely originations and balance growth will continue on a positive, though at times bumpy, trajectory as Hong Kong continues to chart its path to recovery.”
Source: TransUnion HK news