KPMG report: Total assets of licensed banks in Hong Kong will increase by 7.1% to HKD 26 trillion by 2025, with structural changes driving a new round of growth.

KPMG's latest "Hong Kong Banking Industry Report 2026" pointed out that the Hong Kong banking industry recorded strong overall performance in 2025. The total assets of licensed banks in Hong Kong increased by 7.1% to HK$26 trillion, while pre-impairment operating profit also rose by 5.5% to HK$337 billion. Despite the narrowing of net interest margins due to the interest rate cut effects, the balance sheet of the Hong Kong banking industry still showed good resilience. The report indicated that looking ahead, uncertain interest rate prospects, continued weakness in the commercial real estate market, and intensified deposit competition may pose challenges to bank profitability. Therefore, maintaining high-quality asset quality and prudent risk management remain essential to safeguard profitability and maintain balance sheet resilience. While maintaining resilience is still a top priority for the industry, the next phase of growth in the Hong Kong banking sector will increasingly depend on whether banks can adapt to the ongoing structural changes. According to the report, Hong Kong's fixed income and currency (FIC) market offer significant opportunities, and the development roadmap jointly announced by the Securities and Futures Commission and the Hong Kong Monetary Authority has laid a solid foundation for the market's next stage of development. Hong Kong currently accounts for nearly one-third of Asia's international bond issuance and has ranked first in the region for nine of the past ten years. In terms of daily trading volume, Hong Kong is also the fourth largest foreign exchange market globally. As Hong Kong continues to deepen the development of its fixed income and currency markets, maintaining high standards of conduct, transparency, and accountability will be crucial in consolidating its position as a trusted international financial center. Song Jianing, Managing Partner of Banking and Capital Markets for KPMG China in the Hong Kong Special Administrative Region, said that establishing a complete gold value chain is an important extension of the development of Hong Kong's fixed income and currency markets, providing banks with diverse opportunities covering financing, custody, settlement, and the development of innovative products for international and mainland Chinese clients. Historical experience shows that a trading center with long-term competitiveness crucially depends not on attracting fund inflows but on the stability of its market foundation. Song Jianing stated that market trust, the credibility of benchmark pricing mechanisms, and clear accountability standards are important factors in driving market deepening and maintaining stability under pressure. If Hong Kong can establish and consolidate these foundations early on, it will help drive a new round of growth and further enhance its reputation and competitiveness as an international financial center. The report also mentioned that transition finance is another important opportunity. With mainland China increasing its investments in technology innovation and industrial low-carbon transformation, Hong Kong has favorable conditions to become a leading center for transition finance in the region. If banks can establish reliable measurement standards, rigorously examine corporate transformation plans, and develop clear transition frameworks, they will be more effective in aligning financing needs with international capital to seize emerging growth opportunities. Paul McSheaffrey, Senior Partner of Banking in the Hong Kong Special Administrative Region for KPMG China, stated that the outlook for the Hong Kong banking industry is more influenced by structural changes than before. As Hong Kong further consolidates its position as an international financial center and as a bridge between global capital and China, new opportunities are emerging in areas such as capital markets, transition finance, and technology-driven banking services. Therefore, in an environment where traditional sources of income such as net interest margins continue to be under pressure, successfully seizing these opportunities and maintaining strong governance, trust, and resilience will enable banks to achieve sustainable growth.