Hong Kong to log largest rise in bad loans in APAC in 2025

Banks in Hong Kong and the mainland still face subdued loan demand.

Hong Kong will see the largest rise in non-performing loans amongst markets in Asia Pacific in 2025, according to a report by Fitch Ratings.

Its banking sector, together with mainland China, maintained their “deteriorating” outlook as of mid-2025 with tariff risks reinforcing this outlook, the ratings agency said in a report on 19 June 2025 on APAC banking sectors.

“The latter outlook also reflects our view that Hong Kong will see the largest rise in non-performing loans in APAC in 2025, due to a lingering property sector malaise,” Fitch wrote.

Both systems face subdued loan demand compared to historical averages, it added.

The banking sectors of South Korea, Taiwan, and Thailand join the two markets in having a “deteriorating” outlook.

The three markets’ banks are expected to see weakening loan growth, asset quality, and profitability as tariffs rise, given their higher export exposure and sales to the USA.