Financial news
Written by: Zhang Weilun
2019-12-18 10:52
Last updated: 2019-12-18 10:52Investment rating company Moody's issued a report confirming the "Aa2" deposit rating of HSBC and Hang Seng Bank (0011), with a short-term rating of "P-1". Moody's pointed out that due to the economic slowdown, the operating environment in Hong Kong and other regions is more difficult, and at the same time, the rating outlook of the two banks has been reduced from "stable" to "negative".
Moody's pointed out that demonstrations in Hong Kong are destroying the consumer and tourism industries, coupled with trade tensions between China and the United States, increasing uncertainty about the economic outlook in the region, and putting pressure on HSBC and Hang Seng's asset quality and profitability.
Says HSBC Hang Seng Asset Quality Is Strong
However, Moody's also pointed out that the asset quality indicators of the two banks were exceptionally strong. As of the end of June this year, the HSBC and Hang Seng loan ratios were 0.5% and 0.2%, respectively.
Moody's also pointed out that loans to industries affected by demonstrations such as retail, catering and hotels from time to time accounted for a lower proportion of the two banks' overall loans in Hong Kong. Coupled with the government's relief measures such as the introduction of SME loan credit insurance, it is believed that the pressure on asset quality of some banks can be eased.
Moody's pointed out that more than half of the two banks' loan portfolios in Hong Kong were invested in the real estate industry. Due to the more conservative loan-to-property ratio and the better credit standing of the borrower, the related loan risk is lower.
HSBC Hang Seng Bank Moody's
