Hong Kong lending market rebounds, but bad loans also rise: study

Customers seem to be choosing banks over money lenders.

Hong Kong’s lending market is witnessing a recovery in loan demand, but face risks from rising bad loans, according to a study by credit referencing agency TransUnion.

The study, which polled hundreds of Hong Kong financial institutions from March to August 2023, shows that there is a 7% increase in origination volumes during the period compared to last year.

Total new loan amounts also grew 4% in 2023 compared to the same period in 2022.

Most of these new customers are flocking to banks, who saw their customer number rise by 7% year-on-year. Money lenders, meanwhile, saw less traffic, with their customer base contracting 1% from March to August 2023 compared to last year. 

Both banks and money lenders grew origination volumes, of new loans opened.

This aligns with the improved consumer sentiment regarding the economy. An earlier study by TransUnion found that over 1 in 3 respondents or 35% have plans to apply for new credit or refinance existing credit in the next 12 months. This is its highest level since Q2 2022, TransUnion’s Q3 Consumer Pulse Survey said. 
 
However, the number of personal loan delinquencies are also on the rise. Annual write-off rates of Tier 2 and Tier 3 money lenders have