Hong Kong Monetary Authority: Hong Kong retail banks' overall pre-tax operating profit increased by 11.9% year-on-year in the first three quarters.

On December 19th, the Hong Kong Monetary Authority released a new quarterly report, indicating that the Hong Kong banking system remains stable, with ample capital and liquidity. The specific classification loan ratio slightly increased in the third quarter of 2025, but the asset quality of the banking system remains manageable. The overall pre-tax operating profit of retail banks increased by 11.9% in the first three quarters of 2025 compared to the previous year. The increase in profit was mainly attributed to growth in fee and commission income, as well as net interest income. The net interest margin of retail banks narrowed to 1.47% in the first three quarters of 2025, compared to 1.50% in the same period last year. The specific classification loan ratio of the banking system was 1.98% at the end of the third quarter of 2025, compared to 1.97% in the previous quarter. Meanwhile, the specific classification loan ratio of Mainland-related loans decreased from 2.16% in the previous quarter to 1.99%. The delinquency rates for credit card loans and residential mortgage loans were at historically low levels of 0.39% and 0.13% respectively. In terms of balance sheet trends, total loans in the banking industry decreased by 0.9% in the third quarter of 2025, with loans used in Hong Kong, loans used outside Hong Kong, and trade financing decreasing by 0.4%, 2.3%, and 0.7% respectively. Mainland-related loans decreased by 1.5% during the same period. Total deposits increased by 2.4% in the third quarter of 2025, with Hong Kong dollar deposits decreasing by 2.7% and US dollar deposits increasing by 6.4%. The overall loan-to-deposit ratio decreased from 54.3% in the previous quarter to 52.6% in the third quarter of 2025. The liquidity and capital of the banking system remained ample. The average liquidity coverage ratio of Category 1 institutions was 171.2% in the third quarter of 2025, significantly higher than the statutory minimum requirement of 100%. The total capital ratio of locally registered authorized institutions was 24.4% as of the end of September 2025, far exceeding the international minimum requirement of 8%.