Earnings of Hong Kong's top 4 banks drop 19.57% to HK$128.07b in 2014

What are the reasons?

Earnings at the top four Hong Kong banks dropped in 2014, as noninterest income shrank while asset write-downs ballooned, overshadowing an increase in interest income.

According to a research note from SNL Financial, Hongkong & Shanghai Banking Corp. Ltd., BOC Hong Kong (Holdings) Ltd., Standard Chartered Bank (Hong Kong) Ltd. and Bank of East Asia Ltd. reported a 19.57% decline in combined net income attributable to parent companies for 2014, which amounted to HK$128.07 billion.

This is compared to HK$159.24 billion for the previous year.

While their aggregate net interest income grew 8.97% to HK$153.41 billion in 2014 from HK$140.78 billion in 2013, noninterest income dropped 19.13% to HK$130.40 billion from HK$161.25 billion.

Here's more from SNL Financial:

Asset write-downs swelled at all four banks, with their total more than doubling to HK$12.25 billion in 2014 from HK$5.94 billion in the previous year.

Growing default risks in China have been a major concern for Hong Kong banks, as expansion in the world's second-largest economy slows.

Standard & Poor's Ratings Services recently said that a slowdown in the Chinese economy will elevate credit risks for Hong Kong banks, and their earnings will likely come under some pressure in 2015.

The rating agency still has a stable outlook for the city's banks.