Hong Kong Association of Banks (HKAB) chairman Liu Jinbao had a cheerful holiday message for local banks yesterday as he addressed reporters for the last time as the group's head after its bi-weekly meeting. Mr Liu said bank profits this year probably improved over a year ago, despite a gloomy operating environment. For the first three quarters, pre-tax profits at the retail commercial banks held steady over the same period last year, he said. But the economy was projected to have grown at 4 per cent in the last quarter, against 3.3 per cent in the third quarter, which should have bolstered profits, albeit modestly, said Mr Liu. 'With a more active retail sector in Hong Kong and with improvement on bankruptcy cases, the overall profit (this year) will be higher than last year.' He also held out hope for bank workers, predicting fewer redundancies next year. American Express in October announced plans to cut 800 jobs, while HSBC, Hang Seng Bank and Bank of East Asia announced a hiring freeze. Referring to last week's announcement by the controlling shareholders of International Bank of Asia that they intend to sell their stakes, Mr Liu said the SAR's second and third-tier banks were expected to remain under consolidation pressure. He said large financial institutions were also looking for stakes in mainland banks. Overall, Mr Liu said the banking sector would remain constrained by slack domestic demand and shrinking growth of loans and deposits. Mr Liu, who is also the chief executive of Bank of China Hong Kong (Holdings), steps down as HKAB head at the end of this year. He will be replaced by HSBC general manager Raymond Or.