The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Hong Kong: Not-so-hot property

The bad times are far from over for Hong Kong. The financial crisis that has engulfed Asia is continuing to put enormous pressure on the once-vibrant local banking sector. Profits are down and bad and doubtful loans have soared. But in spite of the deteriorating operating environment, bankers are scrambling to maximize existing sources of income and to identify new ones.

Property loans traditionally account for the largest proportion of the local banks' portfolio. The Hong Kong Monetary Authority (HKMA), the territory's quasi-central bank, estimates average exposure to the sector at 40% of total domestic loans - a limit which, until July, it had maintained as the official recommended ceiling on bank lending. The authorities now feel that an across-the-board guideline has served its purpose. Lifting the guideline, HKMA deputy chief executive David Carse said: "The focus should be on internal risk management by institutions themselves and on the market discipline which can be exerted through public disclosure."

Amid tumbling property prices and a high-interest-rate environment, banks needed no prodding to be prudent. Chairman and chief executive of the Bank of East Asia David Li says: "We are reassessing our clients. We have asked some of them to bring in more collateral as security."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree