Personal bankruptcies in Hong Kong have reached record levels as it struggles to come out of its second recession in four years.

More than 17,000 people declared bankruptcy in the first nine months of 2002, nearly three times as many as the same period last year.

The Official Receiver's Office said there were 17,427 cases in January-September, up from 5,963 cases in the year-ago period, with 2,580 in September alone.

Unemployment figures on Monday offered little comfort, despite falling for the first time in 20 months to 7.6% in August, they remain near record levels.

Borrowed time

Hong Kong lenders have reported lower profits in the first half of the year after they had to up their provisions for bankruptcies.

Banks have blamed the government for the sharp rise after it change the bankruptcy laws in 1998 to allow individuals to borrow again after four years instead of the previous eight.

Before the Asian financial crisis in the late 1990s, there were typically a few hundred bankruptcies per year.

Despite mounting defaults, lenders are still aggressively pushing credit cards which remain highly profitable even though write-offs jumped 47% in the second quarter to HK$2.06bn versus the previous quarter.

At the end of June, 9.5 million credit cards were in circulation among the population of 6.8 million.