They hold a fourth of the city’s total card balances.
Consumers in Hong Kong are increasingly swiping for their day-to-day purchases as the growth in credit card balance has exceeded inflation figures on the back of rising levels of new card originations and higher usage of existing cards, according to consumer credit reporting agency Transunion.
Credit card account originations rose by nearly 20% YoY to 581,000 in Q1. Average consumer balance also inched up 2.9% YoY to $39,000 by end-Q2.
Despite the growing use of credit, consumers remain able to repay their dues as consumer-level delinquency rates dropped to 0.07% in Q2.
Younger consumers remained the strongest growth driver in Hong Kong’s credit card usage as millennials (born 1980 to 1994) accounted for two out of every three dollars added to the credit card industry from Q2 2017 to Q2 2018, the report revealed.
The millennial demographic also holds a fourth (25.8%) of the city’s total card balances whilst the opposite trend can be observed for older generation of baby boomers (born 1946 to 1964) which reduced their balances by 3.9% over the same period.
But those from the younger Generation Z (born 1995 onwards) are giving millennials a run for their money as they accounted for three out of 10 credit cards added in the last year. Gen Z balances have nearly doubled to 84.7% YoY in Q2.
“As we’ve seen in recent quarters, the youngest generations are driving growth in the consumer credit market. Many of these consumers are still early in their careers and still entering household formation life stages, and their credit needs are continuing to evolve and grow. This bodes well for the overall Hong Kong market today and in the future,” Brendan le Grange, director of research and consulting for TransUnion Hong Kong said in a statement.
Although the consumer credit market booked another strong performance, Transunion observed that unsecured personal loan market posted declining figures after the number of open accounts fell 2.1% YoY to 618,900 in Q2 2018. The number of consumers with a personal loan also fell 2.2% to 422,100 over the same period.
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