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

Arthur YUEN, Deputy Chief Executive of the Hong Kong Monetary Authority, stated that in the focus of work for 2026, managing credit risks remains a top priority. The pressure on asset quality mainly comes from the commercial real estate in Hong Kong, with outstanding loans in this industry accounting for 14% of the total. This year, banks will continue to be required to maintain loan quality and monitor indicators such as corporate liquidity in order to identify risks early and make appropriate provisions. He also mentioned that small and medium-sized enterprises, transportation, and construction industries are also under pressure, but the amounts involved are smaller. In response to the operational pressures faced by small and medium-sized enterprises, the Hong Kong Monetary Authority has highlighted the work focus of its SME Financing Unit this year, which is to promote a series of support measures by banks and provide more financing channels to assist SMEs in upgrading to green and digital transformation and further expanding their market. By the end of 2025, the ratio of specific classified loans in Hong Kong banks was 2.01%, an increase of 0.03 percentage points quarterly. Arthur YUEN believes that the financial health of the banking industry in the past year has been stable, with the increase not significant, and banks have sufficient provisions. Additionally, industry profits have increased by 7% year-on-year, indicating that overall credit risks remain manageable. In 2025, there was a low single-digit increase in loans in the Hong Kong banking industry. Arthur YUEN said that after communicating with the industry, it was found that there was strong demand for credit in January, and the industry is generally optimistic about credit demand for the year.