HSBC's margins in Hong Kong to start rising in 2014

Thanks to the benefit of mortgage repricing.

According to Barclays, system-wide loan growth decreased to around 10% in 2012, the slowest rate since 1Q10, driven by the introduction of additional property market cooling measures as well as lower loan demand as GDP growth slowed.

Here's more from Barclays:

Barclays analysts in Asia expect mortgage volumes to shrink in 2013, although at least some of this could be offset through higher growth in trade finance related lending as GDP growth recovers.

Abundant system liquidity will continue to exert pressure on asset margins in 2013, but we expect margins to start rising in 2014 as the benefit of mortgage repricing comes through following the 15% risk weight floor introduced in February 2013.

We expect HSBC’s cost base in 2013 to grow at 3%, slightly below the 4% rate of inflation that Barclays economists forecast for this year as it continues to benefit from  the cost reduction programme.

We expect impairments to start rising in 2013 from historically low levels, although the charge will continue to be supported by low interest rates, strong economic growth and low levels of unemployment.