According to the report by KPMG, the high interest rate environment continues to favor the profitability of Hong Kong banks, with a significant increase in net interest margin. The total assets of all licensed banks increased by 2.7% to HKD 23 trillion in 2023, while the net interest margin rose by 30 basis points to 1.84%. KPMG believes that banks' exposure to China's mainland real estate industry and Hong Kong's small and medium-sized enterprises will be key to the quality of credit prospects.

The report also proposes that cost optimization is another key area of focus. Banks are expected to focus on integrating general capabilities, eliminating non-value-added activities, digitizing key functions, reducing labor costs, closely linking process indicators with customer outcomes, and managing credit risks in the coming years.

KPMG also pointed out that retaining and recruiting talent remains a challenge for the banking industry, with total employee costs of surveyed banks remaining stable in 2023, recording only a modest increase of 3.2%. (VC/U)

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