Citibank expects banks in Hong Kong this year to compete fiercely for the unsecured lending market in an effort to create an alternative income source against a backdrop of declining residential mortgage loan growth. Director for sales and distribution at the bank's global consumer banking division Sunny Cheung Yiu-tong said yesterday the risk of a further plunge in residential property prices appeared unlikely as they had already fallen substantially since the middle of last year. He said banks were finding it less risky to write new mortgage loans at present. However, as property transaction volume would continue to be sluggish, banks were expecting a slowdown in mortgage growth this year, prompting them to explore new income streams, he said. Real estate agents estimated the number of property transactions last month at about 7,200 to 7,300, the lowest level since October 1995. Mr Cheung said banks would target the middle-class working population with residential mortgage liabilities outstanding but who still needed unsecured personal finance facilities for extra spending requirements. Citibank yesterday launched a revolving overdraft product Ready Credit which features an interest rate of 15 per cent and a low minimum monthly repayment amount equal to 3 per cent of the borrowed amount. He said banks would find it difficult to replenish the vacuum created by the slowdown in mortgage growth with small unsecured loans. As a result banks should expect to see profit growth declining this year. Apart from unsecured loans and residential mortgages, Citibank has tipped credit card business as another focus for its retail banking operations this year. Facing fierce competition in the consumer finance market, Mr Cheung said banks might be tempted to apply less stringent criteria when approving new loans, which might result in a marginal increase in bad debt levels this year.