Hong Kong's new credit card openings declined by 23.5 percent year-on-year in the second quarter - the most significant drop since the COVID-19 pandemic period, dragged down by a higher unemployment rate and softened consumer demand, according to TransUnion's report.
Credit card originations contracted across all generations and risk categories, except subprime, and inquiries also fell 13 percent during the period, the report said.
New credit card issuances from Gen Z consumers (born 1995–2004) slipped 11.1 percent, while those of Millennials (born 1980–1994) and Gen X (born 1965–1979) dropped 25.8 percent and 26.1 percent, respectively.
As the labour market is affected by economic restructuring and weaker hiring in the construction, finance, and social sectors, leading to a cooldown in the city's credit market, TransUnion said, citing the highest-level unemployment rate of 3.9 percent in the third quarter since August 2022.
In particular, graduates have been the most affected, with the unemployment rate of youngesters aged 20 to 29 rising to 8 percent from 5.4 percent in January - the highest level this year.
Besides, new credit card openings contracted sharply due to softening consumer demand and shifted strategies of lenders in response to some challenging economic indicators, it added.
Regarding personal loans, the total new personal loan inched up 1.2 percent in the second quarter, expanding for the third consecutive quarter.
New personal loans from traditional banks went down 5 percent, but digital banks saw a growth of 35 percent in personal loan originations.
