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Banking & finance
Business

Hong Kong, foreign banks can expect brighter outlook in post zero-Covid China, but will need to rejig strategies

  • ‘This year will be better than 2022 – it will be a market which recovers and restores,’ senior McKinsey partner says
  • Foreign banks must find their niche in China: Fitch Ratings executive

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Lunar New Year decorations at a public park in Beijing. A number of foreign institutions including banks are continuing their expansion into the mainland, betting on China’s reopening as one of the few bright spots in 2023. Photo: AP
Iris Ouyang
The outlook for offshore banks in mainland China is expected to be brighter in 2023 amid the country’s reopening and exit from strict zero-Covid policies, but this will also require the lenders to rethink their strategies in a fast changing and demanding market, analysts said.
Offshore banks – including those based in Hong Kong – with business in China, will find opportunities especially in trade finance, wealth management and consumer finance. But they will also face challenges while carving their niches and finding good lending opportunities after a property bubble burst, analysts said.

“This year will be better than 2022 – it will be a market which recovers and restores,” said Nicole Zhou, senior partner at McKinsey & Company. “The benefits for Hong Kong banks are relatively clear, as the reopening provides an important opportunity for them to serve as a connector between China and [the rest of the world].

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“But for almost all multinational companies including foreign banks, the story is more complicated. They need to reassess their China strategies because the market is not what it was three years ago,” she added.

03:47

First travellers arrive and depart from Beijing as China reopens international borders

First travellers arrive and depart from Beijing as China reopens international borders
The comments come as a number of foreign institutions including banks continue their expansion into the mainland, betting on China’s reopening as one of the few bright spots this year. Standard Chartered was given approval to set up a wholly-owned securities brokerage on January 19, while JPMorgan took full control of its China mutual fund unit the same day.
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