Hong Kong Monetary Authority: Credit risk management remains the top priority this year

The Vice President of the Hong Kong Monetary Authority, Yuang Guoheng, stated that managing credit risk remains the top priority in the key work for 2026. The pressure on asset quality mainly comes from Hong Kong's commercial real estate, where the total amount of outstanding loans accounts for 14% of the overall total. This year, the authority will continue to require banks to monitor loan quality and corporate liquidity indicators, to identify related risks early and make adequate provisions. He also mentioned that small and medium-sized enterprises (SMEs), transportation, and construction industries are similarly under pressure, but the amounts involved are relatively small. In response to the operational pressures faced by SMEs, the Hong Kong Monetary Authority pointed out that its dedicated SME financing task force will focus this year on promoting a series of support measures from banks and providing more financing channels to assist SMEs in transitioning to green and digital upgrades and further expanding their markets. By the end of 2025, the specific classification loan ratio for Hong Kong banks is 2.01%, an increase of 0.03 percentage points quarter-on-quarter. Yuang Guoheng believes that the banking sector has been financially stable over the past year, with the related increase not being significant, and banks already have sufficient provisions. Additionally, industry profits have increased by 7% year-on-year, indicating that overall credit risk remains controllable. In 2025, the Hong Kong banking sector is expected to record low single-digit growth in loans. Yuang Guoheng mentioned that after communicating with the industry, he learned that credit demand in January was decent, and the industry is generally optimistic about credit demand this year