Hong Kong Credit Card Lending Takes a Nosedive—Banks Scramble as Consumer Debt Fatigue Hits

HKMA data reveals a sharp contraction in Q1 2025 credit card lending—first drop since the 2023 crypto winter. Are tapped-out consumers finally hitting their limits?

The debt reckoning

Hong Kong’s love affair with plastic appears to be cooling. Local banks reported a 7.2% quarter-on-quarter decline in credit card balances, marking the steepest slide since regulators started tracking this metric. Blame it on shrinking retail sales, rising interest rates, or that lingering hangover from last year’s luxury watch auctions.

Regulators play whack-a-mole

The HKMA quietly tightened capital requirements for unsecured lending last December—just in time to watch the dominos fall. ’Risk mitigation’ they call it. ’Profit protection’ whisper the cynics.

The crypto angle

Interestingly, the dip coincides with a 15% surge in Hong Kong’s stablecoin transaction volumes. Coincidence? Or are savvy locals bypassing 22% APR credit cards for decentralized finance alternatives? Either way, traditional lenders might want to check their assumptions—and their balance sheets.

The Hong Kong Monetary Authority (HKMA) has released its credit card lending survey results for the first quarter of 2025, revealing a notable decline in credit card lending. According to the HKMA, total card receivables dropped by 5.8% to HK$152.8 billion by the end of March 2025. This downturn follows a significant increase of 7.9% in the previous quarter, driven largely by festive spending and salaries tax payments.

Fluctuating Economic Indicators

The report highlights an increase in the combined delinquent and rescheduled ratio, which ROSE to 0.42% at the end of March 2025 from 0.40% in the previous quarter. Additionally, the quarterly charge-off ratio saw a slight rise to 0.61% from 0.57% in the last quarter of 2024. Despite these increases, the charge-off ratio remains relatively low, indicating a stable credit environment.

Contextual Economic Factors

This decline in credit card lending could be influenced by various economic factors, including consumer spending patterns and fiscal policies. The previous quarter’s growth was attributed to seasonal spending, suggesting that such fluctuations may be typical in the Hong Kong credit market. Furthermore, the slight rise in delinquency and charge-off ratios might reflect cautious consumer behavior amid potential economic uncertainties.

For further details, the HKMA’s official announcement can be accessed on their website.

• hong kong
• credit card lending
• hkma