Hong Kong Monetary Authority: The ratio of classified loans in the Hong Kong banking system at the end of the first quarter was 1.87%, an improvement of 0.14 percentage points compared to the previous quarter.

The Hong Kong Monetary Authority (HKMA) stated that the asset quality of the Hong Kong banking system improved in the first quarter of 2026. The specific classification loan ratio of the Hong Kong banking system decreased from 2.01% at the end of the fourth quarter of 2025 to 1.87% at the end of the first quarter of 2026. During the same period, the specific classification loan ratio of mainland China related loans also decreased from 1.94% in the previous quarter to 1.79%. According to the HKMA's banking sector overview, as of the end of the first quarter of 2026, the delinquency rates for credit card loans and residential mortgage loans were 0.39% and 0.13% respectively, representing a 0.04 percentage point increase and 0.01 percentage point decrease respectively compared to the previous quarter. The liquidity and capital of the banking system remained strong. The average liquidity coverage ratio of category 1 institutions in the first quarter of 2026 was 160.2%, significantly higher than the statutory minimum requirement of 100%. The total capital ratio of locally incorporated authorized institutions was 24.9% as of the end of March 2026, well above the international minimum requirement of 8%. The net interest margin for retail banks in the first quarter improved by 2 basis points year-on-year to reach 1.53%. Total banking sector loans increased by 3% in the first quarter of 2026, with loans used in Hong Kong, loans used outside Hong Kong, and trade financing increasing by 2.7%, 3.1%, and 7.9% respectively. Mainland China related loans also increased by 4.3% during the same period. Total deposits increased by 1% in the first quarter of 2026, with Hong Kong dollar deposits increasing by 1.9% and US dollar deposits decreasing by 0.8%. The overall loan-to-deposit ratio increased from 52.2% at the end of the fourth quarter of 2025 to 53.2% at the end of the first quarter of 2026. Overall pre-tax operating profit for retail banks increased by 22.3% year-on-year in the first quarter of 2026. The increase in profits was mainly attributed to higher trading investment income, dividends from subsidiaries and associates, as well as growth in fee and commission income, partially offset by a decrease in foreign exchange and derivative business income. The net interest margin for retail banks in the first quarter of 2026 was 1.53%, slightly higher than the 1.51% in the same period last year.