Hong Kong banks face another testing year, with few lending opportunities, margins that will remain under pressure and a sluggish recovery in the economy.
As the old year fades into the distance, the effects of this year's tough operating environment are already on display, with mortgage lenders trying to sell their portfolios and small banks in search of buyers.
The Hong Kong-arm of the world's largest bank - Citigroup - has said it is thinking of quitting the local home-loan market, which analysts see as becoming increasingly less profitable due to the razor-thin margins banks are earning.
International Bank of Asia's major shareholders, meanwhile, said they wanted to quit their investment in the local banking industry.
While the bank insists its shareholders' decision to sell was to re-allocate assets to other - hopefully more profitable - areas, market watchers generally agree that their sale is driven by a lacklustre future in the SAR's banking market.
According to a report by accounting firm Deloitte Touche Tohmatsu, not only did the amount of bad and doubtful debts recorded for 2001 rise 24 per cent over a selection of 23 banks, but bad debts continued to rise well into 2002.
