(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Curtailing Household Debt
Benefits Hong Kong
HONG KONG, January 28 (Fitch) Fitch Ratings says in a new report
that new stress
testing requirements on personal loans in Hong Kong will protect
excessive debt accumulation and limit banksâ€™ exposure to a
interest-rate hike. This adds personal loans to the
authoritiesâ€™ focus on
The changes, however, do not impact the banksâ€™ China-related
Fitch expects to remain the major asset-quality pressure point
supervision will likely intensify in 2014.
Fitch expects banks to adopt tighter underwriting standards for
by linking debt-servicing ratios to loan tenors. The banksâ€™
methods for pricing
should improve as banks adopt internal stress-testing for a
300bp increase in
loan pricing, as required by the Hong Kong Monetary Authority.
separate liquidity stress tests will address banksâ€™ resilience
in light of
increasingly volatile fund flows.
Banksâ€™ risk appetite for personal loans varies. Personal loan
from 11.6% of total loans at Shanghai Commercial Bank Ltd (A-/
Stable) to 1.1%
at Industrial and Commercial Bank of China (Asia) Ltd (A/Stable)
Fitch has maintained Hong Kong at the highest Macro Prudential
of â€˜3â€™ since November 2010, flagging systemic risks from
fast loan growth. Hong
Kongâ€™s leverage is one of the highest in Asia, with domestic
credit/GDP ratio at above 180% and household credit/GDP at 65%.
The report, â€˜Curtailing Household Debt Benefits Hong Kong
Banks - Prudential
Measures Examine Unsecured Loans; China Risk Remains
Unaddressedâ€™, is available
at www.fitchratings.com, or by clicking on the link above.
+852 2263 9966
Fitch Ratings (Hong Kong) Limited
2801, Tower Two, Lippo Centre
89 Queensway, Hong Kong
+852 2263 9924
+852 2263 9984
Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935,
Additional information is available at www.fitchratings.com.
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