Existing credit card usage up, new card interest down

Credit card enquiries decreased by 8% YoY in Q1 2024.

More Hong Kong consumers are leveraging their existing credit cards, evidenced by outstanding and average balances increasing by 8.6% and 7.5% in Q1 2024, respectively. As the use of existing credit cards rose, interest in new ones decreased.

According to the latest TransUnion Industry Insights Report for Hong Kong, credit card enquiries – a measure of consumers applying for new cards – decreased by 8% year-over-year (YoY) in Q4 2023, and origination volumes decreased by 20% YoY over the same period. 

The TransUnion report also found that personal loan originations decreased by 8.7% YoY during Q4 2023, despite higher demand for this product with a 4.0% YoY increase in enquiry volumes. 

Meanwhile, the average new loan amount issued increased by 2.9% YoY as lenders shifted a larger share of new originations to lower-risk borrowers.

For personal loans, originations by the highest risk subprime borrowers tier fell 5.6%, while near prime grew by 4.8%. 

TransUnion said the shift might reflect a change in lender appetite as they focus on less risky segments due to a slight uptick in delinquencies for this product. 

The report also noted money lenders have actively targeted lower-amount loans, aligned to their business model, and have built significant brand loyalty.