Non-performing loans at Hong Kong's lenders will probably climb this year because of the slowing economy, but they are unlikely to reach the peak levels of the late 1990s and early 2000s, said Benjamin Hung Pi-cheng, the chief executive of Standard Chartered Bank (Hong Kong).
Mr Hung said that although this would be a challenging year, hopefully the healthy fundamentals in Hong Kong and Asia could soften and shorten the impact of the global economic turmoil.
'It's not easy to foresee, but we hope we can maintain our earnings growth [this year],' he said.
London-based Standard Chartered posted a better than expected 17.24 per cent profit increase for last year. However, the pre-tax profit of its Hong Kong operation shrank 15 per cent to HK$7.91 billion on a decline in wealth management business and rise in loan impairment in the second half of the year.
Mr Hung said the pressure on wealth management and bad debts could persist in the short term and it would take time to restore investor confidence. Still, bad debts were unlikely to rise to the levels seen in the previous two downturns.
From 1998 to 2000, bad debts soared on defaults by investment arms of the mainland authorities called 'window' companies. In 2002 and 2003, they rose amid a surge in bankruptcies.