KPMG: Hong Kong banking sector shows strong resilience and steady growth in asset operations in 2024

The Zhitong Finance App learned that the “Hong Kong Banking Report” released by KPMG shows that despite continuing challenges to the global economy, the Hong Kong banking industry will show steady growth and operational resilience in 2024. According to the report, the total assets of the surveyed Hong Kong licensed banks increased by 4.5% to HK$24 trillion last year; operating profit before impairment also increased 7.8% to HK$318 billion. Facing weak demand for loans and narrowing net interest spreads, the banking industry continues to focus on cost control and improving operational efficiency.

Ma Shaohui, KPMG's senior banking partner in the Hong Kong Special Administrative Region of China, said that in the face of a challenging macroeconomic environment and the impact of trade tension, the Hong Kong banking industry is still showing strong resilience. This depends on the industry's long-term commitment to prudent risk management, capital management and digital transformation investments to enable it to respond flexibly to market fluctuations and maintain international competitiveness.

Total loans and advances decreased by 2.3% last year, while total customer deposits increased by 4.1%. The bank's non-performing loan ratio rose from 1.65% to 2.15%, mainly due to continued challenges faced by commercial real estate and the overall real estate industry. However, most banks are still actively implementing risk management measures, including diversifying portfolio risk and using digital tools to enhance early risk warning capabilities.

The Bank of Hong Kong is speeding up the adoption of artificial intelligence (AI) technology, particularly agentic AI (Agentic AI), to help improve operational efficiency, risk management and compliance levels.

Mo Kaijo, KPMG's financial services technology consulting partner in the Hong Kong Special Administrative Region of China, pointed out that agent-based AI is developing faster than expected. Although the Hong Kong banking sector is prudent in dealing with potential risks, it is generally showing positive performance in this technology and is speeding up the pace of adoption. If the Bank of Hong Kong can adopt a strategic and data-based approach to promoting agency-based AI applications, it will be able to take a leading position in the increasingly fierce market competition.