KPMG: Strong resilience of Hong Kong banking industry in 2024, steady growth in asset operations.

The "Hong Kong Banking Industry Report" released by KPMG shows that despite the ongoing global economic challenges, the Hong Kong banking industry is still demonstrating steady growth and operational resilience in 2024. The report indicates that the total assets of licensed banks in Hong Kong surveyed last year increased by 4.5% to HKD 24 trillion, while pre-impairment operating profit also increased by 7.8% to HKD 318 billion. Faced with weak loan demand and narrowing net interest margins, the banking industry continues to focus on cost control and operational efficiency improvement. Stephen Ma, Senior Partner of the Financial Services Practice in KPMG China Hong Kong SAR, stated that despite the challenging macroeconomic environment and the impact of trade tensions, the Hong Kong banking industry continues to demonstrate strong resilience. This is due to the industry's long-term commitment to prudent risk management, capital management, and digital transformation investment, enabling them to adapt to market fluctuations and maintain international competitiveness. Total loans and advances decreased by 2.3% last year, while customer deposits increased by 4.1%. The non-performing loan ratio increased from 1.65% to 2.15%, mainly due to ongoing challenges in the commercial real estate and overall property sectors. However, most banks are actively implementing risk management measures, including diversifying portfolio risks and using digital tools to enhance early risk warning capabilities. Hong Kong banks are accelerating the adoption of Artificial Intelligence (AI) technology, especially Agentic AI, to improve operational efficiency, risk management, and compliance levels. Ricky Mo, Partner in Financial Services Technology Consulting at KPMG China Hong Kong SAR, pointed out that the development speed of Agentic AI has exceeded expectations. While Hong Kong banks are cautious in addressing potential risks, they generally have a positive attitude towards this technology and are accelerating its adoption. By taking a strategic and data-driven approach to promoting the application of Agentic AI, Hong Kong banks can maintain a leading position in the increasingly competitive market.