Hong Kong bankers, regulators voice concern over property market downturn, Bloomberg reports

Hong Kong bankers and regulators are growing increasingly concerned over the city’s worst property market downturn since the Asian financial crisis, Bloomberg reported.

Hong Kong Monetary Authority has intensified scrutiny of banks’ decisions on non-performing loans, including checking lenders’ willingness to extend credit to smaller developers, according to the report.

Banks are also reassessing collateral values behind hundreds of billions of US dollars in property loans, the report said.

Bloomberg cited more than two dozen bankers and property consultants, saying that the move underscores pressure on a sector that remains a pillar of Hong Kong’s economy.

Commercial real estate loans account for roughly 8 percent of the HK$10 trillion banking system, S&P Global Ratings data show, while government figures indicate office prices have fallen about 50 percent from the 2018 peak.

“It is the HKMA’s long-standing supervisory requirements that banks must manage credit risk prudently,” a HKMA spokesperson said in response to Bloomberg’s queries.