Banks see steady growth in 2024 amidst global uncertainty

Cost management, risk vigilance, and digital innovation give resilience to the industry.

Hong Kong's banking sector grew steadily in 2024, showing resilience despite the ongoing global economic challenges thanks to efficient operation concepts, according to a recent KPMG Hong Kong Banking Report.

The total assets of all surveyed licensed banks in Hong Kong rose by 4.5% to $24t in 2024. Operating profit before impairment charges increased by 7.8% to$318b.

This was attributed to the bank's active cost control and operational efficiency facing low loan demand and compressed net interest margins.

Total customer deposits increased by 4.1% despite total loans and advances reduced by 2.3% with asset quality under pressure in 2024, as most banks continued to exercise risk management like portfolio diversification and digital risk detection.

The report also highlights the sector's progress in digital innovation. Banks in Hong Kong are quickly adopting artificial intelligence to enhance efficiency and compliance.

The Hong Kong Monetary Authority has also been a leader in the application of banking blockchain technology, its Ensemble project is exploring the use of wholesale central bank digital currencies to facilitate the settlement of tokenized assets.

The banking sector will continue facing a challenging environment due to US monetary policy uncertainty, geopolitical tensions and economic strains in the Mainland, said the report.

“The focus on prudent risk management, capital discipline, and ongoing investment in digital transformation will help Hong Kong Banks maintain competitiveness,” said Paul McSheaffrey, Senior Banking Partner of Hong Kong SAR from KPMG China.