HONG Kong's rising affluence may have deluded people into thinking that those who knock on a bank manager's door for a personal loan want to buy more luxuries. It is easy to forget the people in the lower income groups who find it difficult to catch up with high inflation and rising living standards. But JCG Holdings, principally a money-lender to consumers in this group, has reported a spectacular 49 per cent profit growth to $143.8 million, generated from its 33-branch network covering major housing estates in the territory. The consumer lending business which makes up 74 per cent of its loan portfolio, recorded a steady 28 per cent growth in total loan amount. The deposit-taking company has successfully ventured into a no man's land in the financial world that is overlooked by major banks and not yet fully developed by other financial institutions: mortgage financing for older buildings. Showing a 200 per cent jump from a $50 million loan base in 1992 to $150 million in 1993, mortgage financing has expanded to occupy an increasing share of JCG's loan portfolio, and currently stands at 19 per cent. This jump was not totally unforeseen by the management. ''Statistics from the Government revealed that of all private living quarters in Hong Kong, 73 per cent were built before 1985, amounting to about 708,800 units,'' JCG general manager Leong Kwok Nyem said. He added that its advertising and promotional efforts were directed at this business during 1993. Residential properties falling into this category are usually owner-occupied, aged between 15 years and 20 years with an average size of 400 square feet or below, and priced around $1.5 million. JCG's lending margin for these is 50 per cent to 55 per cent, taking into account the age and the lower liquidity of the market compared with new flats financed by other banks. The repayment period ranges between seven and 10 years which is correspondingly lower than for new flats. While banks are charging 1.75 percentage points on top of the prime rate for mortgage loans, JCG levies a four to five percentage point margin over the prime rate. Mr Leong contends that the interest margin is the same as the big banks because JCG obtains deposits at a higher rate. As a deposit-taking company, it is only allowed to take deposits of at least $100,000 and with a minimum maturity of three months. ''We consistently offer half a percentage point higher than the rates of other DTCs,'' said Lai Kim Leong, chief executive officer of Public Bank, which holds 55 per cent of JCG and is the third largest bank in Malaysia in terms of shareholders' fund. In a year when banks are facing problems securing longer-term deposits, JCG recorded a 69 per cent climb in deposit growth to $518.3 million. Facing the big banks with their strong and extensive networks, JCG has avoided a head-on clash in the new residential mortgage market. How has JCG carved out its market share in personal overdrafts and instalment loans? ''We can approve a loan application in half an hour to one hour, having efficient checking and credit appraisals,'' Mr Leong said. The company keeps a data bank of its past customers as well as known bad payers whose names have appeared on court lists of loan defaulters. Its bad debt ratio for consumer lending is about 1.8 per cent to two per cent, while for mortgage lending the rate is zero. Lower overheads are another of the company's unique features compared with the licensed banks. It does not need to operate in expensive areas, and its branches are located mainly in large housing estates, in offices of about 800 square feet and manned by only five to six staff. ''We are not keen to open new branches but will continue to relocate branches in response to demographic changes. We relocate about four to six branches each year,'' Mr Leong said. Its cost of funding is also comparatively low. Although it offers higher interest rates to attract deposits, it is using its interest-free shareholders' funds to finance its loan growth. The loan-to-deposit ratio stood at 162 per cent at the end of last year. Funds collected from its listing in 1991 and a capital injection in 1992 have put the company in a comfortable and liquid position. However, further growth will come from increased deposits. ''It will remain one of our strategies next year to procure deposits to fund loan growth and not by injecting more capital,'' Mr Leong said. In spite of the strong growth, Mr Leong anticipates that keen competition will chip away part of the growing business in 1994. ''I expect the actual loan growth to be around 20 to 22 per cent,'' he said, adding that it was difficult to achieve high growth from a larger base.