, Hong Kong
Photo courtesy of Public Bank's LinkedIn.

Stable profits buoys Public Bank HK’s resilient credit profile

However, higher funding and credit costs will weigh down on profitability.

Public Bank Hong Kong’s credit profit is expected to remain resilient over the next 12 to 18 months, buoyed by its stable capitalization and profitability, reports Moody’s Investors Service.

In its latest ratings commentary of the bank, Moody’s noted Public Bank HK’s modest asset quality, very strong capitalization, good liquidity supported by a concentrated deposit base and low reliance on market funding, and good profitability.

Capitalization is expected to remain strong and profitability stable at about 0.9%, supported by Public Bank HK’s net interest margins, which are expected to come higher than other Hong Kong banks rated by Moody’s.

“PBHK's profitability will be underpinned by the higher interest environment and better returns from its fixed income investments. However, Moody's expects the bank's profitability to be weighed down by higher funding costs and credit costs, which the agency expects to be in line with its historical average of about 60 basis points (bps) over the next 12-18 months,” it added.

Join Hong Kong Business community

However, asset risks will rise as borrowers’ debt repayment capacity is weighed down by increasing rates. 

ALSO READ: Public Bank posts 22.6% net profit surge in Q1

Public Bank HK’s problem loan ratio deteriorated to 1.2% as of end-2022, from only 0.91% in end-2021, hit by its property-related loans, unsecured personal loans, and hire purchase license loans.

“Nevertheless, Moody's does not expect a material rise in credit costs because of the bank's high collateral coverage ratio, which was 83.2% as of the end of 2022. The moderate economic recovery in Hong Kong SAR, China and mainland China will also be a mitigating factor,” the ratings agency said in Public Bank HK’s latest ratings commentary, in which Moody’s affirmed its A3/P-2 deposit rating for the bank.

Furthermore, market risk arising from the bank’s investments are “not significant”, says Moody’s, because the holdings are classified at amortized costs, has an average duration of less than one year, and consists mainly of short term instruments issued by governments and financial institutions.

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

Most older adults in Hong Kong lack life and death education
More than 90% still die in hospitals. This disconnect is due to legal, logistical, and medical barriers, the report said.
HKEX launched Order Routing Service on Integrated Fund Platform
The move addressed some long-standing operational challenges.Hong Kong Exchanges and Clearing Limited (HKEX) launched the Order Routing Service that connects fund distributors and transfer agents on its Integrated Fund Platform (IFP).The new service is based on the Fund Repository system and helps transform the fund order placement process into a seamless and integrated system.Supported by the data network from Shenzhen Stock Exchange, the service promotes better efficiency and collaboration across the fund distribution network by enhancing communications between fund distributors and agents.IFP also welcomes an initial cohort of 33 distributors, transfer agents and fund houses.
HKTDC signs first MOU with Singapore-based bank
The partnership also aims to generate job opportunities and strengthen communities across both regions.The Hong Kong Trade Development Council (HKTDC) signed a Memorandum of Understanding (MOU) with United Overseas Bank Hong Kong Branch (UOB Hong Kong) at the ASEAN Conference 2025 in Singapore, a first of such a partnership for Hong Kong.The MOU aims to strengthen regional ties and promote sustainable growth by leveraging UOB’s extensive regional network and financial expertise, alongside HKTDC’s strengths in trade promotion, to access new markets, resources and professional knowledge.The MOU also promotes local enterprise development and economic resilience by matching local value chains with foreign direct investments(FDI). 
OCBC Bank Hong Kong sets up team to support entrepreneurs
OCBC Group is aiming to disburse S$5b in loans to entrepreneurs by 2028