Loans are the most important business of banks.
The main way for banks to absorb deposits is to put in loans.
In recent years, the loan-to-deposit ratio of the banking industry has been above 70%.
As the mainland's reform and opening up continue to deepen and the economy continues to develop, Hong Kong has become the most important financial intermediary hub for capital to and from mainland China, and it has also become an important source of funds for overseas companies to "walk in".
The scale of loans issued by Hong Kong banks in the Mainland has increased significantly from a low level in 2009 to HK$4.88 trillion at the end of June this year, accounting for about 45% of the total loans of Hong Kong banks. It is an important part of the total assets of Hong Kong banks. The profitability and sustainable operation of the industry are very important.
According to recent media reports, Evergrande is in a debt crisis, and the subsequent solvency situation is worrying.
Some people in the banking industry pointed out that whenever such incidents of Evergrande happen, the Hong Kong Monetary Authority will require the bank to report the latest debt information of the company and even the industry in which it is engaged, including loans and bonds.
In mid-October, there was another high-profile intervention by the Financial Reporting Bureau, announcing that it had launched an investigation into Evergrande’s continuing operations report, including the 2020 annual accounts, 2021 interim accounts, and PricewaterhouseCoopers (PwC) 2020 audit. Number division report.
According to industry sources, the Evergrande incident has not had a major impact on Hong Kong's banking system, and the overall risk is still under control. The main reason is that the industry has always had reservations about lending to Evergrande.
The prudence of the Hong Kong banking industry towards Evergrande reflects to a certain extent the credit risk management capabilities of the industry.
As a banking supervisory agency, the HKMA requires all banks to have a comprehensive credit risk management system to enable banks to detect, calculate, monitor, and control credit risks, and to ensure that they have sufficient capital to cope with the risks they assume.
However, with the rapid growth of various businesses, banks still need to continue to improve credit management.
In the latest issue of the "Hong Kong 01" electronic weekly newsletter, special writer Luo Wenhua put forward five suggestions for further strengthening the credit management of local banks...
Luo Wenhua
Doctor of Business Administration, with more than 30 years of work experience in the insurance and banking industry, focusing on economic development, innovation and technology, and financial industry regulation
For details, please read the 289th "Hong Kong 01" Electronic Weekly Newsletter (November 1, 2021) "
Enlightenment of Evergrande Incident on Improving Hong Kong Bank Credit Management
".
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289th issue of "Hong Kong 01" Electronic Weekly News
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