Why it's almost impossible for Hong Kong banks to repeat robust 1H13 results

Is it because of more intense competition?

According to Bernstein Research, it will be unlikely for the Hong Kong banks to replicate the strong H1 '13 results in the second half. 

The sharp increase to the banks' H1 loan-to-deposit ratios (+490bp) will almost surely draw increased scrutiny from the HKMA.

Here's more from Bernstein Research:

This will likely force the banks to raise deposits. The increased competition is likely to result in higher funding costs and will have a negative impact on NIMs.

While the Offshore RMB business continues to grow for the banks, it remains too small to be significant. 

Investor sentiment on the HK banks has become increasingly negative following the earnings results (except for the M&A speculation that boosted some of the small banks' share prices).

While we expect ROEs to decline 150-200bp in the second half, we believe the share prices will continue to perform in line with the overall market. In fact, the HK banks could benefit from a rotation of funds out of the Indian, Indonesian, Thai, etc. banks.

Among the local banks, we rate all three BOC(HK), Hang Seng and Bank of East Asia Market-Perform. We rate DBS and HSBC Outperform and Standard Chartered Underperform.