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Hong Kongers used credit cards more on average in Q3: study

Card origination volumes contracted, but average card limits are higher.

More Hong Kongers used their credit cards in the third quarter of 2023, according to data from consumer credit insights company TransUnion.

Average consumer credit card utilisation rose across all risk tiers during the quarter, compared to the same period in 2022. At the same time, the number of new-to-credit consumers in the city rose by 32% year-on-year (YoY). This is reportedly the most significant.

“The substantial card balance growth has been driven by increased spending capacity, well supported by limit increases on new and existing cards issued over the past quarter,” said Weihan Sun, principal of Research and Consulting for Asia Pacific at TransUnion. 

“Lenders seeking further confident growth opportunities could consider the untapped potential of new-to-credit consumers, consisting of younger consumers coming of age and consumers who are new to the Hong Kong region, particularly as companies are increasing their efforts to attract international talent in a post-COVID-19 environment,” Sun added.

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Whilst credit card origination volumes– a measure of new accounts opened– fell by 12.2% YoY, the average limit issued for new cards in the second quarter of 2023 was 10.1% higher than the past year. This reflects rising spend patterns, the study noted.

This increase is also reflected in existing cards. Outstanding balances rose by 15,9% YoY in Q3, and average balances per consumer jumped by 14% YoY. Total credit limit on existing cards rose by 2.7% over the same period.

This increased utilisation and higher card balances were likely driven by higher levels of retail spending. 

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This is reflected by the higher retail sales in Hong Kong. The value of retail sales rose 13.7% YoY in August, and by 19.3% in the first nine months of 2023 compared to the same period in 2022. 

Other contributing factors to the increased card utilisation may be enhanced cash-back reward programmes offered by lenders seeking to capitalise on the retail resurgence. Whilst those campaigns came to an end during Q3 2023, more are likely to follow during the upcoming festive season, TransUnion said in its report.

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