Local banks saw their pretax operational profit in the first half of the year rise 13.4 percent from a year ago but their net interest margins continue to narrow, the Hong Kong Monetary Authority said.
The expanded earnings were mainly thanks to increases in income from foreign exchange and derivatives operations, the HKMA said.
But retail banks' net interest margins shrank by 0.04 percentage points to 1.47 percent for the first six months, partly offsetting the increase in investment income.
The classified loan ratio of the banking sector advanced to 1.97 percent at the end of June, up from 1.89 percent 12 months ago.
The gauge for mainland-related lending dropped by 0.62 pps to 2.16 percent within one year.
The delinquency ratio of residential mortgage loans climbed to 0.13 percent as of June from 0.1 percent one year earlier.
Meanwhile, the proportion of defaulted credit card lending also rose to 0.4 percent as of June from 0.34 percent a year ago.
The HKMA said the banking sector continued to be liquid and well capitalized, as the liquidity coverage ratio of category 1 institutions was 172.8 percent in the second quarter of 2025, well above the statutory minimum requirement of 100 percent.
