This photo shows the city view of Hong Kong on May 5, 2023. (PHOTO / XINHUA)
Hong Kong officials on Tuesday offered reassurance on the city’s banking system amid the challenging market environment, citing high liquidity and capital adequacy ratio to dismiss concerns over capital outflow.
Addressing the HKIB Annual Banking Conference, Deputy Financial Secretary Michael Wong Wai-lun said global markets have been reeling from the economic downturn, high interest rates and geopolitical tensions, but Hong Kong’s liquidity and capital adequacy ratio stand above the international standard.
In the first half of the year, the total amount of bank deposits in Hong Kong also increased by 0.19 percent, according to Wong, who added that the upward trend from the previous year continued although the rise was not significant.
The number of fintech companies in Hong Kong has increased from less than 180 to over 800, ranging from digital payment firms, and financial advisory to wealth management service providers, said Deputy Financial Secretary Michael Wong Wai-lun
He emphasized that if some commentators were suggesting capital outflows from Hong Kong, it was because they do not understand the facts.
Speaking of Hong Kong’s recovery, Wong said the city has seen great vitality since the lifting of the pandemic, as evidenced by the jump in the number of tourists.
This trend is set to gain pace as Hong Kong this month kicked off its “Night Vibes Hong Kong” campaign to boost local market sentiment by rebooting the city’s nightlife, he noted.
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Officials have announced a string of activities under the campaign, including discounts on evening movie tickets, live shows at multiple harborfront sites, and regular events, such as the National Day fireworks.
Wong also highlighted the development of financial technology (fintech) in Hong Kong. The number of fintech companies in Hong Kong has increased from less than 180 to over 800, ranging from digital payment firms, and financial advisory to wealth management service providers, he said.
The government will continue to nurture a large pool of talent to support the development of fintech and green finance and will also promote projects such as the central bank digital currency, he added.
Arthur Yuen, deputy chief executive of the Hong Kong Monetary Authority, the city’s de facto central bank, said that credit risk is the biggest challenge for the global banking system, including those in Hong Kong.
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He pointed out that the debt crisis among mainland property developers and non-bank financial institutions has not yet stabilized, and the ratio of specific classified loans in Hong Kong banks may continue to rise in the coming months.
Nevertheless, the banking sector has already been warned about the risks associated with highly leveraged property developers, Yuen said, adding that the impact on Hong Kong’s banking system is limited given the lenders’ provision coverage and good profitability.
Additionally, he mentioned that the banking industry needs to be vigilant about the risks of financial crimes.
In the first half of this year, there were over 12,000 cases of fraud, representing a 42 percent increase compared with the same period last year, with losses totaling HK$2.1 billion ($268 million), according to Yuen.
