Guan Guoheng: Hong Kong banking industry remains stable, credit risks are manageable.

Arthur YUEN, Deputy Chief Executive of the Hong Kong Monetary Authority, stated that despite the changing credit environment and increasing credit risks, the Hong Kong banking industry remains stable, with sufficient capital and liquidity, and the quality of assets is still manageable. Despite the increase in risks, credit risks remain under control. With interest rates still high, the credit environment is challenging, and the debt issues of some Mainland property developers have not been fully resolved. Coupled with the weakness in the local commercial real estate market, the HKMA continues to monitor the asset quality and credit risk management of accredited institutions. He pointed out that in terms of business operations and technology risks, following the issuance of the Regulatory Policy Manual Unit OR-2 on operational resilience in May 2022, the HKMA has been monitoring and communicating regularly with the industry to enhance the operational resilience of banks. All banks in Hong Kong have developed operational resilience frameworks in accordance with the requirements of this unit, and major banks have also accelerated the shortest recovery time for a series of key operations based on regulatory feedback from the HKMA. He further mentioned that most banks are currently in the critical phase of work pairing and scenario testing. As of the fourth quarter of 2024, major banks have completed about 70% of key operational pairings and about 50% of scenario testing. It is expected that all banks can roughly meet the requirements of the Regulatory Policy Manual Unit to achieve full operational resilience by May 2026. Regarding the Cross-boundary Wealth Management Connect, Arthur YUEN pointed out that the Cross-boundary Wealth Management Connect 2.0 was launched in February 2024, covering five optimization measures (product scope, individual investor quotas, investor qualifications, sales processes, and securities company participation). By the end of 2024, over 130,000 individual investors had participated in the program, nearly doubling from the end of 2023. He mentioned that the HKMA continues to closely monitor fraudulent activities in Hong Kong. The police recorded over 40,000 cases of fraud in the first 11 months of 2024, involving losses exceeding HK$8.5 billion, an increase of 8.7% compared to the same period last year. The HKMA received 828 complaints related to fraud in 2024, a decrease of about 31% from 2023.