18 January 2020

HKMA to closely monitor loans after IMF warning on mainland debt

The Hong Kong Monetary Authority (HKMA) is closely monitoring local lenders’ exposure to mainland debt, but so far, it sees no immediate risk to the city’s banking system, Apple Daily reported Thursday, citing a spokesman of the regulator.

The city’s de facto central bank will conduct regular on-site review of banks’ loan activities to make sure they issue loans prudently, the spokesman said on Wednesday.

His comments came after the International Monetary Fund (IMF) warned that Hong Kong banks’ loans to mainland entities are rapidly growing and loan quality may deteriorate this year as mainland authorities tighten credit, prompting marginal borrowers to seek financing in Hong Kong, the report said.

According to the IMF, Hong Kong financial institutions’ loan exposure in the mainland now comprises 19 percent of their total assets excluding loans to other banks. Such a large exposure requires that local regulators step up monitoring and cooperation with mainland supervisors.

Hong Kong loans and advances in February rose 3.2 percent from the previous month after a 3.7 percent growth in January, while the annualized growth rate in the first two months was 41.9 percent, the newspaper said, citing the latest HKMA data.

– Contact HKEJ at [email protected]