Kingfive Financial News | Hong Kong banking stocks generally fell, with Hang Seng Bank (00011) down by 5.36%, Dahsing Banking Corp (02356) down by 4.12%, Bank of E Asia (00023) down by 3%, BOC Hong Kong (02388) down by 2.13%, HSBC Holdings (00005) down by 0.71%, and Stanchart (02888) down by 0.18%.

Morgan Stanley's report pointed out that in 2025, Net Interest Margin (NIM) in the banking industry will be a key focus. Compared to local Hong Kong-based banks, there will be a preference towards international banks, with a clear preference for Stanchart (02888).

Morgan Stanley believes that with the quarterly rise in Hong Kong's interbank offered rate and soft loan growth, Net Interest Income (NII) will continue to be under pressure. The main impact of interest rate cuts will be seen in 2025, making NII a key focus. Non-interest income will remain strong, benefiting mainly from sustained robust wealth and market income support. Costs are expected to be well managed.

The bank expects that the Expected Credit Loss (ECL) will not bring any surprises, however, the non-performing loan ratio of Critical Elements Corp (CRE), an important entity in Hong Kong, may still rise, and market attention should revolve around this.