The Hong Kong Monetary Authority believes that the space for further reduction of the most favorable interest rates is limited.

According to the Hong Kong Economic Daily, citing Ng Leung Hang, Deputy Chief Executive of the Hong Kong Monetary Authority, deposit rates have fallen to zero and banks have limited room to further reduce their most favorable rates. From a risk management perspective, Ng Leung Hang stated that banks should avoid further narrowing their net interest margins and should maintain a prudent strategy. The non-performing loan ratio in Hong Kong rose slightly to 1.98% in the third quarter of last year. Ng Leung Hang pointed out that this reflects a worsening credit quality of local businesses, including commercial real estate loans. He added that it is still difficult to determine whether the credit quality in the commercial real estate sector has bottomed out, and challenges still exist.