Cross-Border Flows Offset Earnings Pressure on Hong Kong Banks, Fitch Says
Healthy cross-border wealth and capital flows mitigate near-term earnings constraints for Hong Kong banks, Fitch Ratings said in a recent release.The banks posted double-digit growth in wealth management fees and solid deposit inflows last year due to increased flows, Fitch said.The trend will persist in 2026, although the pace may moderate due to a high base and geopolitical risks, especially with the Iran conflict, the rating agency said.Policy efforts and growing IPO activity have helped Hong Kong maintain its status as a regional wealth center, leading to solid growth in nonresident bank accounts, brokerage volumes, and investment product distribution, Fitch said.Resulting gains in fee and income and a surge in low-cost deposits balance profitability constraints from weak loan demand, lower net interest margins, and higher credit costs due to local commercial real estate exposure, the rating agency said.