Following the latest round of rate cuts by the U.S. Federal Reserve, the Hong Kong Monetary Authority (HKMA) reduced its base rate to 4.25% in October, marking the second cut in 2025. Marie Claire Lim Moore, President of TransUnion Asia Pacific and CEO of Hong Kong, commented, "While lower credit costs help stimulate market demand, financial institutions may see narrowed margins as they adjust interest rates accordingly. We anticipate uneven market growth. Therefore, institutions that can swiftly respond to demand and implement personalized strategies to serve target customer segments will stand out in the competition."

TransUnion's latest quarterly report, *A Mixed Market Environment: Steady Recovery in Hong Kong's Consumer Credit Market*, highlights that major Hong Kong banks have adjusted their prime rates (P), reducing borrowing costs for consumers and supporting the steady recovery of the credit market. Although income growth remains modest and unemployment has risen, particularly among younger generations, retail conditions are gradually improving, and the property market is stabilizing. The overall trend suggests neither rapid expansion nor weakness but a cautiously optimistic environment, offering growth opportunities for financial institutions that can accurately identify and seize them.

TransUnion recommends that Hong Kong financial institutions closely monitor four key indicators to discern genuine market signals: 1) credit approval portfolios and standards, 2) early repayment trends (30/60 days), 3) differences in rate adjustments compared to peers, and 4) regional property market sentiment. If these indicators remain robust, institutions should actively meet the credit needs of responsive consumers. Conversely, if indicators weaken, tightening credit approvals and focusing on higher-performing customer segments would be advisable.