TransUnion: More Hongkongers' household income drops as pandemic drags on

Hongkongers' household incomes had been further impacted by COVID-19 in the most recent months, while more people had reached out to financial institutions to discuss payment options, a TransUnion study unveiled. 

As the number of COVID-19 cases surged in Hong Kong, the city's economy has also been impacted. According to TransUnion's latest Hong Kong Financial Hardship Survey, the impact of the pandemic on consumer income and employment conditions had worsened.

Compared to the previous wave of the survey conducted in June, the percentage of consumers who stated that their household incomes had been impacted by COVID-19 had increased by three percentage points from 68% to 71%.

The greater impact on consumers can be explained by a five-percentage point increase in the number of people who said they had endured reduced working hours due to COVID-19 – up from 55% in the previous survey to 60% in the latest wave of the study.

A similar increase was reported by consumers who had lost their jobs. A total of 21% said they had lost their jobs – a five-percentage point increase since the last wave (16%).

“Our latest survey shows that Hong Kong consumers’ financial hardship has been exacerbated by the recent spike in infections, with a worsening impact on consumer income and employment,” said Francis Lau, director of research and consulting for APAC at TransUnion.

Among all surveyed generations, Gen Z respondents (consumers born in 1995 or later) reported that they had suffered from the greatest impact on household incomes, increasing by nine percentage points from 61% to 70%.

This can be explained by a greater percentage (24%) of Gen Z respondents indicating they had lost their job, which was up significantly from the previous survey (15%).

The worsening financial condition would imply a greater concern regarding their ability to meet payment obligations. Since the previous survey, a larger percentage of impacted consumers (79%, up from 74%) had reported concerns about being able to pay their bills. Almost half (45%) of the impacted consumers felt they would be unable to pay within four weeks’ time, which was a marked 10 percentage points increase since late June.

Credit card bills (42%) were the biggest concern for repayment, followed by rental payments and personal loans (both 34%), insurance (31%), and mortgages (26%) – a sequence in line with the previous observations. The proportion of consumers estimating large shortfalls of at least HK$16,000 doubled, from 17% to 34% in the recent survey.

"This will be especially challenging for the youngest generation, Gen Z, who are experiencing severe financial hardship at the very beginning of their careers. They will likely feel the impact of the pandemic for many years to come," Lau said.

A significant proportion (89%) of financially impacted respondents (up from 86% in the last survey) found self-credit monitoring an important mechanism during the pandemic, and more respondents now know their credit score. The percentage of respondents who did not know their credit score had decreased from 42% to 32% in the latest survey.

The majority of respondents (68%) had received guidance from at least some of the companies or financial institutions with which they have accounts. As a result, 40% of respondents received some form of financial accommodation, a 14 percentage point increase over the previous survey (26%).

“Over the past few months, we’ve gradually seen increased collaboration between consumers and financial institutions to come up with solutions to alleviate financial hardship together," said Marie Claire Lim Moore, CEO for Hong Kong at TransUnion.

"The pandemic may have brought about significant pressures, but the impact can be minimized through effective credit education that empowers people to understand and take charge of their finances," she added. 

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