Consumer lending is expected to be rather sluggish in Hong Kong in 2022, compared with the huge recovery seen in 2021. Nevertheless, overall gross lending and the outstanding balance are set to maintain values almost equivalent to those seen the previous year.
Card lending continues to account for the most significant share of gross lending in consumer credit, and is set to maintain slight growth in 2022, helping drive the positive performance of overall consumer credit in Hong Kong in 2022. E-commerce continued to grow strongly amidst the fifth wave of the pandemic and ongoing social restrictions, which will help drive up card gross lending and the outstanding balance in the year overall, as credit cards remain the most convenient and widely accepted by merchants.
In light of the global inflation crisis, four of Hong Kong’s largest banks increased their prime rates for the first time in four years, following the move of the US Federal Reserve. The increase in prime lending rates will have a negative impact on the property market, as it is likely to further lift mortgage rates.
Following the success of virtual banks in terms of penetrating debit cards and savings plans, major players have now expanded to card lending and personal loans. Mox Bank and Livi Bank are the only players offering card lending, with Mox Credit and Livi PayLater Mastercard.
Although expected to see a better performance than in 2022, gross lending in consumer lending in Hong Kong is expected to see slower growth compared with the peak recovery in 2021, due to the global inflation crisis. With major banks raising prime rates and the Hong Kong Interbank Offered Rate (HIBOR), interest rates are most likely to continue increasing over the forecast period.
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Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.See All of Our Definitions
This report originates from Passport, our Consumer Lending research and analysis database.
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