Credit card issuances fall 17.9pc in first quarter

Credit card issuances in the first quarter fell 17.9 percent year-on-year, reflecting weaker demand and heightened lender caution alongside elevated unemployment, according to credit reporting agency TransUnion.

The agency’s Hong Kong Industry Insights Report showed that total open credit card accounts fell 1.5 percent year-on-year by the end of the second quarter.

New credit card accounts among Generation Z consumers, born 1995–2004, fell 1 percent year-on-year. The slowdown was partly due to youth unemployment having reached a high of 6.8 percent in the second quarter, the highest since December 2022, as recent graduates entered a saturated job market.

“Elevated youth unemployment is a leading indicator for what lenders can expect of credit market growth activity over the next six to 12 months,” said Sun Weihan, principal of research and consulting for Asia Pacific at TransUnion.

Lenders should revisit their originations strategies in the coming months and identify growth opportunities among the younger generation, Sun added.

From a borrower risk perspective, new credit card activity for subprime consumers, the lowest tier in TransUnion’s risk scoring, rose 9.9 percent year-on-year, albeit from a low base and primarily driven by money lenders. In contrast, all other risk tiers recorded double-digit decreases.

The growth in subprime cardholders may be an indication that lenders are seeing fewer high-quality prospects in the market, Sun said. “It might also reflect a shrinking pool of borrowers who meet the appetite of traditional lenders, which may warrant attention."

STAFF REPORTER