Recently, KPMG released its 2024 report on the banking industry in Hong Kong, pointing out that due to the higher interest rate environment in 2023, the balance sheet of Hong Kong banks showed moderate growth, and net interest margin and operating surplus increased significantly.
According to the Wisdom Finance App, KPMG recently released its 2024 report on the banking industry in Hong Kong, pointing out that due to the higher interest rate environment in 2023, the balance sheet of Hong Kong banks showed moderate growth, and net interest margin and operating surplus increased significantly. The bank expects that despite the challenges of the business environment, the Hong Kong banking industry will lay the foundation for future development in 2024. Ma Shaohui, KPMG's senior partner in the Hong Kong banking industry, stated that with interest rates likely to remain higher than expected, the banking industry will continue to benefit. However, the timing and magnitude of the interest rate cut still remain uncertain, and banks should formulate corresponding strategies to respond.
KPMG's financial services partner in China, Shen Yaowen, stated that as the high interest rate environment continues, banks need to manage their loan portfolios and beware of credit risks while increasing profits. The expected interest rate cut, coupled with the continued increase in costs, means that banks must face challenges, control costs, and create space for further investment.
KPMG believes that for banks that are more involved in capital markets, the interest rate environment will bring bullish support, and as stocks become more attractive, banks engaged in investment banking and wealth management businesses will benefit. As the interest rate cycle changes, different factors such as capital market activity, stock risk premiums, corporate debt financing, and inevitable cash risk premiums and opportunity costs will have varying degrees of impact on each bank when the interest rate cycle reverses.
Looking ahead, KPMG said that banks' exposure to China's mainland real estate industry and Hong Kong's small and medium-sized enterprises will be a key factor in the prospects of credit quality. Any further measures taken by the Chinese authorities to curb and manage the real estate industry, will be crucial to stabilizing the market and reducing borrower defaults. In addition, the speed and strength of Hong Kong's economic recovery from the ongoing impact of the COVID-19 pandemic, especially for small and medium-sized enterprises, will be another key factor. If the Hong Kong economy rebounds strongly, it will help improve the credit environment.