HKMA: Hong Kong banks maintain high provisioning coverage, good profitability
Hong Kong Monetary Authority deputy chief Eddie Cheng said banks' specific classification loan ratio edged down, provisioning coverage is high, and profitability remains good, indicating credit risk is controllable. Cheng also noted the authority encourages banks to support SMEs, with a lending comm
The Hong Kong Monetary Authority (HKMA) said on 6 November that the city's banks have maintained high provisioning coverage and good profitability, with credit risks remaining controllable.
HKMA deputy chief Eddie Cheng told the Legislative Council's Financial Affairs Committee that the specific classification loan ratio of Hong Kong banks had edged down. He said provisioning coverage is high and banks' profitability remains good after making provisions, indicating credit risks are manageable. However, Cheng stressed that current conditions should not be used to judge future risks, as many macro risks remain to be addressed.
Responding to lawmakers' questions about whether the HKMA would strengthen stress tests, Cheng said stress testing is a dynamic process and the authority regularly adjusts its parameters in line with interest rate trends and macroeconomic factors. He emphasised that Hong Kong's banking sector as a whole is in good shape and he is not too concerned.
Cheng also noted that the HKMA has been encouraging banks to support small and medium-sized enterprises (SMEs) in their physical business operations. Over the past year, banks have supported SMEs in technology upgrades, market development and business transformation. Loans are needed by SMEs across different sectors for these purposes. The authority has required banks to commit to providing a certain lending quota to SMEs, with the latest quota reaching more than HK$400 billion.
Another HKMA deputy chief, Lee Tak-sing, said the Commercial Data Interchange (CDI) has developed smoothly, with an increasing number of data providers joining, allowing enterprises to use more data to obtain loans. He said a survey conducted over the past few months showed that SMEs using CDI for financing enjoyed interest rates 36 basis points lower than those not using it, demonstrating tangible benefits for SMEs.