The HKMA released its latest quarterly report, stating that the Hong Kong banking system remains stable, with capital and liquidity buffers being more than sufficient. Although the specified classified loan ratio rose 0.23 percentage points to 1.79% on a quarterly basis, the asset quality of the banking system remains healthy.

In the first quarter, the pre-tax operating profit of the retail banking sector as a whole increased by 5% year-on-year, driven mainly by the increase in investment income from trading, but some of the gains were offset by the increase in total operating expenses and loan impairment allowances. The net interest margin of the retail banking sector narrowed to 1.53% during the period, compared with 1.56% in the first quarter of 2023.

Total bank loans in the first quarter decreased by 1%, with loans used in Hong Kong decreasing by 1.2%, loans used outside Hong Kong and trade financing falling by 0.5%, and relevant loans in Mainland China decreasing by 2%. The HKMA indicated that the banking industry's deposits remain stable, with an overall slight decline of 0.2% in the total deposit amount in the first quarter, with HKD deposits increasing by 0.1% and USD deposits decreasing by 0.6%. The overall loan-to-deposit ratio decreased slightly from 62.8% in the previous quarter to 62.3% in the first quarter of 2024. The delinquency rate for credit card loans increased slightly to 0.33%, while the delinquency rate for residential mortgage loans increased slightly to 0.08%.

The HKMA believes that the liquidity and capital of the banking system remain sufficient. The average liquidity coverage ratio of Category 1 institutions in the first quarter was 176.1%, far exceeding the statutory minimum requirement of 100%. The total capital ratio of locally incorporated authorized institutions as of the end of March 2024 was 21.1%, which also exceeded the international minimum requirement of 8%.