Moody's maintains negative outlook on Hong Kong's banking sector

Credit ratings agency Moody’s maintained its negative outlook on Hong Kong’s banking sector, citing rising asset risks and profitability pressures.

The agency said asset risks remain elevated due to weakening debt repayment capacity among property-related borrowers, declining collateral values, as well as lower loan-loss coverage.

It expects net interest margins to shrink amid rate cuts and sluggish loan demand, while capital adequacy will stay stable due to lower risk-weighted asset growth and cautious dividend policies.

STAFF REPORTER