Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Tuesday, Mar 19, 2024

Hong Kong's banks “may be” out of the pandemic woods, KPMG says

Hong Kong's banks “may be” out of the pandemic woods, KPMG says

Hong Kong's banks may have put the worst of the pandemic behind them and may see an improvement in their profitability in 2021, although COVID-19-related uncertainties remain, a report from KPMG said.
Hong Kong-based lenders saw their aggregate profit before tax decline 28% and revenue fall by 11% in 2020 as the pandemic hit several businesses, including trade, retail sales and tourism. Low interest rates eroded margins while faltering businesses pushed nonperforming loans higher, according to the KPMG Hong Kong Banking Report 2021 released June 15.

The ratio of impaired loans among the banks surveyed in the report slipped to 0.71% in 2020, from 0.50% in 2019. The aggregate net interest margin of local banks fell by 41 basis points to 1.37% in 2020. Still, Hong Kong's banks still have relatively strong balance sheets that can withstand the economic impact of the pandemic, according to the report.

"NPL rates, although increased from prior years, are still well within previous crisis [levels]," Paul McSheaffrey, Hong Kong partner for financial services at KPMG China, said during a call with reporters. "They're still pretty, pretty good, I think, given everything that's been going on in the last 12 months or so."

Hong Kong has kept COVID-19 largely under control with stringent quarantine rules for travelers and people who may have come in contact with someone infected with the virus. The city's tally of 11,879 confirmed cases as of June 14, with 210 related deaths, is still considered low, given that it has some of the highest-density population clusters in the world. Authorities remain on alert, meanwhile, as vaccinations have lagged targets. Despite the widespread availability of two vaccines, only 25.9% of the population had received the first dose of vaccine by June 12, while only 17.7% have been fully vaccinated, according to government data.

While a prolonged low interest rate environment will drag on NIMs in the future, the pickup in overall business activity will be a positive, according to the report.

This year, Hong Kong's consumer spending, investment and trade flow has increased, McSheaffrey said, which will help boost the city's economic activity. According to latest government data, Hong Kong's value of total retail sales increased 12.1% year over year in April. For the first four months, retail sales were up 8.5% compared with the same period in 2020. Although numbers have improved, a government spokesperson said that sales volume "was still far below its pre-pandemic level as inbound tourism remained frozen."

Once tourists return, Hong Kong's economy could rebound further, McSheaffrey said. "For the rest of 2021, economic activity in Hong Kong is actually looking quite positive, and that will definitely help the banks."

The report also highlighted key themes that will have a significant impact on Hong Kong's banking sector in the years ahead. Environmental, social and governance action is a key area for regulators, and the financial industry is actively looking at ESG-compliant financial products. Wealth Management Connect, the plan aiming to serve Hong Kong, Macau and seven other cities in mainland China with wealth management products and fund flows, is also an area that will propel Hong Kong's wealth management industry, particularly as banks rely on fees to prop up revenue in the backdrop of declining NIM.
Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×