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HSBC plans to eliminate more banking fees in Hong Kong as virtual lenders disrupt troubled industry
- Decision to trim fees follows a move in August last year that forced rivals to respond to protect their customer base
- Five out of eight virtual banks have started operations in Hong Kong despite the pandemic, with incentives to lure deposits away from traditional lenders
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HSBC plans to trim a host of banking fees from November for many of its retail customers to fend off competition from virtual banks. Rival lenders are likely to respond, pressuring margins in an industry already suffering from rising loan defaults.
The lender will scrap fees on 26 general banking and transaction services to benefit some 4 million account holders in Hong Kong, it said in a statement. It represents a major act after the UK-based lender eliminated the minimum balance fee in August last year.
Since the coronavirus outbreak in January, the city’s biggest lenders have built on their “community bank” image by waiving charges and extending repayment holidays to help businesses overcome the Covid-19 crisis despite rising bad loans amid a deepening recession.
“Today’s cut reflects our commitment to making sure that everyone has the tools they need to thrive financially,” Greg Hingston, regional head of wealth and personal banking for Asia-Pacific, said in the statement. “We hope it will also help customers who have been hit hard by Covid-19’s economic fallout.”
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HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus
HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus
Retail banks in Hong Kong recorded a 7.7 per cent slide in operating profits in the first quarter from a year earlier, according to the HKMA quarterly bulletin. Net interest margin narrowed to 1.51 per cent from 1.58 per cent, while asset quality deteriorated as loan provisions increased.
The pressure may intensify as five of the eight virtual banks licensed by the Hong Kong Monetary Authority began their operations during the pandemic, dangling carrots to lure customer deposits – a cheap source of funding – away from traditional lenders. On the other hand, banks have been under tremendous strain to trim jobs and save costs to please investors.
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