Monetary Authority: Pre-tax operating profit of retail banks fell by more than 26% in the first three quarters, and loan quality deteriorated slightly

Financial News

Written by: Xu Shihao

2020-12-23 18:00

Last update date: 2020-12-23 18:00

The Hong Kong Monetary Authority issued a new quarterly report. Despite the challenges posed by the novel coronavirus pneumonia epidemic and geopolitical tensions, the banking system in Hong Kong remains stable and has sufficient capital and liquidity. However, all industries, large and small, are affected by the epidemic. Banks The quality of loans has deteriorated slightly, but is still stable by historical and international standards.

The bureau said that in the face of a low interest rate environment and a slight decline in loan quality, retail banks' profits have narrowed.

Looking ahead, the epidemic and economic prospects are highly uncertain, which may continue to put pressure on banks' loan quality and profitability in the coming months.

Net interest margin narrowed to 1.24% in the first three quarters

In the first three quarters, the overall operating profit of Hong Kong retail banks before tax decreased by 26.1% year-on-year; the decrease in net interest income (-19.6%) and the increase in loan impairment provision (+83.1%) were the main reasons for the decrease in profit; As for the retail banking net interest margin, it narrowed from 1.64% in the first three quarters of last year to 1.24% in the same period this year.

In addition, the decline in the quality of banking loans in the third quarter slowed down; the specific category loan ratio increased slightly from 0.79% at the end of June to 0.84% ​​at the end of September. The asset quality of loans related to the Mainland remained generally stable, and the specific category loan ratio remained stable. It was 0.96% at the end of September, compared with 0.94% in the previous quarter.

During the same period, the delinquency ratio of credit card loans fell from 0.39% to 0.33%, while the delinquency ratio of residential mortgage loans remained stable at only 0.04%.

Monetary Authority Yu Weiwen