Hong Kong banks post 19.3 per cent rise in 2022 profit on better interest margins, ending three-year slide: HKMA

Hong Kong banks’ net interest margins widened to 1.31 per cent in 2022, compared with 0.98 per cent in 2021 and 1.18 per cent in 2020

While deposits in the banking system rose 1.7 per cent in 2022, loans fell 3 per cent, the first decline in two decades

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Total deposits in Hong Kong’s banking system rose 1.7 per cent in 2022, slower than the 4.6 per cent increase a year earlier. Photo: Shutterstock

Published: 5:30pm, 17 Feb 2023Updated: 10:27pm, 17 Feb 2023

Hong Kong’s retail banks reported 19.3 per cent pre-tax profit growth in 2022, arresting three years of declines on the back of widening interest margins and an improving economy towards the end of the year, the Hong Kong Monetary Authority (HKMA) said on Friday.

Local lenders’ profit slumped 19.8 per cent in 2021 and 29.4 per cent in 2020 when the city’s economy was badly affected by the Covid-19 pandemic. It fell 0.6 per cent in 2019 because of the months-long social unrest in the second half of the year.

Hong Kong banks’ net interest margin – the gap between the cost of funding and the interest rate charged to clients – widened to 1.31 per cent in 2022, compared with 0.98 per cent in 2021 and 1.18 per cent in 2020, the HKMA’s annual banking sector data showed.

It was not all positive, however. Bad or doubtful loans stood at 1.38 per cent last year, compared with 0.88 per cent a year earlier.

Arthur Yuen Kwok-hang, Deputy CEO of HKMA, pictured in January 2020. Photo: Felix Wong

Last year was full of challenges as the Covid-19 pandemic interrupted many businesses, but the banking sector remained resilient amid strong capital and liquidity, Arthur Yuen Kwok-hang, the HKMA’s deputy CEO, said at a press briefing.