Fitch spells out bank risks

Business | Joyce Chen 19 Jul 2018

China-related exposure is likely to remain the biggest concentration risk for banks in Hong Kong, given that some banks' non-performing loan ratios have surpassed the system-wide average, according to Fitch Ratings.

Such exposure had grown 14 percent year on year to HK$7.8 trillion by March, which is 2.7 times the gross domestic product.

Meanwhile, exposure from the property market was 12 percent in the city, which the credit rating agency believes is controllable.

The head of China Bank Ratings, Grace Wu, said banks in China should be careful on property mortgage loans and be mindful of a possible slump in property prices due to policy changes.

Household debt accounted for 37 percent of new loans in the mainland in the first quarter of 2018, the agency said.

That rapid growth might trigger medium-to-long-term risks for Chinese banks, and financial institutions should update their strategy to offset that, said Wu.

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