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Natixis: HK Banks Facing Biggest Asset Quality Pressure in Past Decade, But CRE Stress Not Enough to Trigger Systemic Risk
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The Hong Kong banking industry is facing the biggest asset quality pressure in the past decade, but the risk remains far below the levels seen during the Asian financial crisis, Gary Ng, Senior Economist for Asia Pacific at Natixis, said. Ng believed that the risk in Hong Kong's commercial real estate (CRE), particularly the office market, is more pronounced, with office prices falling about 30% or more from their peak, vacancy rates reaching higher levels, and net rental income growth being limited. It is believed that the trend will be difficult to reverse in the next 3-5 years, potentially forcing highly leveraged property owners or developers to sell at lower prices. Although CRE accounts for only 8% of banks' loan portfolios, it is not enough to trigger systemic risk but remains the largest source of pressure for the Hong Kong banking industry. AASTOCKS Financial News Website: www.aastocks.com |
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