AdvertisementBanking & financeBusinessBanking & FinanceHong Kong banks’ profit growth slows as rising bad debts offset wealth-management income
Profit growth slows to 7.3 per cent from 8.4 per cent a year earlier as bad loans exceed two-decade average, HKMA says
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Hong Kong’s retail banks posted 7.3 per cent pre-tax profit growth last year, as rising bad debts and a narrower net interest margin offset growing income from wealth-management services.
The city’s 30 retail banks recorded lower growth in aggregated pre-tax profit than in 2024, when profits increased 8.4 per cent, according to data from the Hong Kong Monetary Authority (HKMA).
The annual growth was much slower than the 62 per cent jump in 2023, when the city had just reopened the border with mainland China after the Covid-19 pandemic, and the 18.7 per cent increase in 2022, the data showed.
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“Overall, the banking sector in Hong Kong remains profitable, and the capital adequacy ratio and other key data remain well above international requirements,” said the HKMA’s deputy chief executive Arthur Yuen Kwok-hang, in a media briefing on Thursday.
Local lenders have been hit by a higher proportion of bad or doubtful loans as the commercial real estate sectors in both Hong Kong and mainland China have been struggling.
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Hong Kong banks’ bad debt ratio stood at 2.01 per cent of total lending at the end of last year, slightly above the 2 per cent average over the past two decades. The ratio was 1.96 per cent at the end of 2024, 1.5 per cent at the end of 2023, 1.4 per cent in 2022 and 0.88 per cent in 2021.
“Overall economic sentiment has improved recently,” Yuen said. “Still, there are certain industries, such as commercial real estate, that are still facing a lot of challenges. As such, HKMA will continue to work with the banks to manage their asset quality. Since the banks have made sufficient provisions against bad debts and local lenders are profitable, the risk management of the asset quality remains manageable.”
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