Wing Lung Bank predicts that side effects from the Asian economic crisis will lead to a worsening of the economic situation in Hong Kong in the second half of the year.
Executive director Philip Wu Po-him, at the launch of a Visa card co-branded with realtors Century 21, said slow loan growth and increasing mortgage risk would slow the banking sector's financial performance.
'Side effects from the Asian economic crisis are going to begin appearing in the second half of the year, and the fundamentals of the Hong Kong economy are not very positive,' Mr Wu said.
'The second half of the year is going to be even worse than the first half.' Mr Wu said Wing Lung's provisions for bad loans would almost certainly be significantly higher this year.
'That will be the case for all banks,' he said. 'Delinquencies are expected to be slightly higher this year . . . given rising unemployment, it will be harder for people to pay down their mortgages.' While there had been an increase in delinquencies to 30 and 60 days, Mr Wu said he was not concerned, because there was no evidence of outright mortgage defaults.
Mr Wu said that there was no way to tell when the situation might improve for the economy.
