Hong Kong retail banks’ profits up 4.5 per cent in first three quarters

Hong Kong’s retail banks saw a modest rise in profits in the first three quarters of the year thanks to improved income from foreign exchange activities.

According to figures from the Hong Kong Monetary Authority, retail banks in the city saw their pre-tax operating profits rise by 4.5 per cent in the first nine months of the year in comparison with the same period of 2015.

The HKMA said that the growth could be attributed to increases in both income from foreign exchange and derivatives operations and from dividends received from subsidiaries, while a decline in operating expenses also contributed to the improvement.

The three elements provided increases of 4.5, 3.5 and 4.1 percentage points respectively to the banks’ profitability.

These increases were offset, however, by a fall in fee and commission income, which led to a 7.8 percentage point reduction.

The profit improvement over the first three quarters marks a turnaround in performance after banks had a troubling early part of this year. In the first quarter of 2016, retail banks’ profits fell by 4.8 per cent, albeit in comparison to a strong first quarter in 2015, in which incomes were boosted by large trading volumes in stock markets in both Hong Kong and mainland China.