Date
24 September 2017
Hong Kong banks' high loan exposure to mainland firms is a cause for concern, some analysts say. Photo: Bloomberg
Hong Kong banks' high loan exposure to mainland firms is a cause for concern, some analysts say. Photo: Bloomberg

HK banks’ loan exposure to mainland firms up 10.7% in 1Q

Hong Kong banks’ lending to mainland companies reached HK$2.87 trillion at the end of March, marking an increase of 10.7 percent from the end of 2013, Ming Pao Daily reported Friday, citing data from the Hong Kong Monetary Authority.

The growth came as a tight credit environment in China prompted mainland firms to seek to more financing from offshore lenders.

Given the big exposure to the mainland, Moody’s has maintained a negative outlook on the Hong Kong Banking industry for the next 12-18 months, the report noted. The rating agency is said to be concerned about a potential rise in bad loans in the mainland amid a slower economy.

China’s economy expanded 7.4 percent year-on-year in the first quarter, decelerating from a 7.7 percent growth pace in the preceding three months. If the growth slows further, non-performing loans ratio of Hong Kong banks are expected to rise, Raymond Yeung, senior economist at ANZ Banking Group was quoted as saying.

Chen Baoming, an analyst with Hongce Investment, was quoted as saying that growth of such lending could slow down going forward as mainland authorities have started boosting liquidity via targeted bank reserve requirement ratio cuts.

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