Credit Cards Growth Led Consumption Increase in Q2 in HK- Reports

The Hong Kong consumer credit market sees positive origination and balance growth across most major consumer lending products in the second quarter, latest quarterly report by TransUnion showed. Card balance growth in Q2 2018 exceeded inflation driven by increased new card originations, which went up 20% y-o-y from the first quarter, the research found.

Credit cards are leading the rise in overall consumer balance growth. Q2 2018 is now the third consecutive quarter in which year-over-year card balance growth has exceeded inflation. " This balance growth has been driven by both new card originations and increased utilization of existing cards" the research found.

Credit card account originations in the first quarter of 2018 were up nearly 20% year-over-year, to HKD 587K, compared to the same quarter a year ago. Average consumer balances at the end of Q2 2018 increased 2.9% over the prior year, to 39.0K. Consumer-level delinquency rates–the percentage of consumers 90 or more days past due on one or more cards–dropped one basis point over the past year to 0.07% at the end of Q2 2018.

Younger -consumers were once again the engine for that growth. While Baby Boomers (born 1946 to 1964) reduced their balances by 3.9% year-over-year, Millennials (born 1980 to 1994) accounted for two out of every three dollars added by the credit card industry in the last year (Q2 2017 to Q2 2018). They now hold 25.8% of total card balances.

Mortgage Market on the Rise

The research also found mortgage inquiry volumes reached their highest levels in three years, despite higher house prices and rising interest rates. As of Q2 2018, there were 532K mortgage accounts, up 7.6% from Q2 2017. As well, mortgage account origination increased year-over-year by 0.7%, to 26.5K in Q1 2018. At the same time, account-level delinquency rates (60 or more DPD) dropped 1 basis point to 0.04%.