, Hong Kong

Economic downturns threaten HSBC profits, restructuring: analysis

Low confidence levels could reduce demand for credit and lending and revenue growth.

Persistent slowdowns in Hong Kong’s economy could put pressure on HSBC’s profitability and complicate strategic restructuring, according to a DBRS Morningstar report.

Low confidence levels could reduce demand for credit and lending and revenue growth. A weakening household income can erode borrowers’ debt servicing capacity and the bank’s asset quality and the cost of risk, analysts Tomasz Walkowicz and Elisabeth Rudman said.

“We note however that the share of Hong Kong in credit exposure is not as high as its share in the Group’s earnings. Hong Kong represents around 30% of the Group’s gross loans and 22% of RWAs in Q3 2019. Furthermore, the quality of the credit exposure benefits from the Group’s high underwriting standards,” they added.

The city’s standing as a long-term international trade and financial centre is also being questioned as a deteriorating outlook on economic performance could lead to cross-border capital outflows, affecting the banking sector’s liquidity and domestic interest rates. Any potential outflow from HSBC’s network in Hong Kong could benefit subsidiaries in countries with a large Chinese immigrant population like Canada or Australia.

“In our opinion, the deterioration in the economic outlook for Asia represents a risk to the re-deployment of capital into faster growing and more profitable Asian businesses.”

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

What is Lorem Ipsum?
What is Lorem Ipsum? Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

Exclusives

Sed molestie interdum dui sit amet egestas
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout.
CIMB Niaga leads the way in captivating Indonesia’s youth
The bank’s digital solutions are winning over younger generations with 3.2M mobile users and 96% digital transaction rate in 2023.