Hong Kong banks face weaker times as 9-month profit growth slows
Hong Kong banks posted their slowest profit growth in three years as lower net interest margins and rising bad debt offset wealth management income.
Pre-tax profit rose 8.4 percent in the first nine months of 2024, compared with 62 percent in 2023 and 18.7 percent in 2022. Hong Kong Monetary Authority (HKMA)
Banks’ net interest margin (NIM) – the difference between the amount paid on loans and the interest paid on deposits – fell to 1.5 percent in the first nine months of last year, compared with 1.67 percent in 2023, the data showed. NIM was 1.31 percent in 2022, 0.98 percent in 2021 and 1.18 percent in 2020.
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“Profits have remained good among banks, but this year we need to focus more on bad debt issues and rising financial fraud,” HKMA deputy chief executive Arthur Yuen Kwok-hang said in a media statement on Wednesday.
Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority (HKMA) Photo: Jelly Tse alt=Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority (HKMA). Photo: Jelly These>
The industry’s NIM was squeezed when Hong Kong’s central bank lowered the city’s interest rate. Full percentage point In three installments from September, at Lock By cutting US Federal Reserve. Following the change, commercial banks in the city have reduced the cost of credit to their customers by 62.5 points.
Adding to the pressure on banks’ balance sheets, the amount of bad or doubtful loans has risen, as more businesses are taking on higher levels of funding in a shaky economy. The ratio rose to 1.99 percent of total loans in September, 1.89 percent in June, 1.5 percent in late 2023, 1.4 percent in 2022 and 0.88 percent in 2021.
Still, the banking sector has “adequate safeguards and risk management measures in place to manage the risks,” he said. “Bad debts have not affected the profitability of banks in Hong Kong.”
HSBCStandard Chartered, Bank of East Asia And other banks continue to make provisions for bad loans linked to mainland China’s sagging real estate sector.
The number of mortgage loans rose 34 percent to 40,713 from 30,288 in June and 25,163 at the end of December, according to HKMA data. It is the highest year-end figure since 67,575 in the fourth quarter of 2003.
