Hong Kong banks see 5% profit rise

Hong Kong’s retail banks recorded a 5% increase in pre-tax operating profit in the first quarter year-on-year, driven by higher investment incomes, despite a rise in mainland-related lending risks, according to the Hong Kong Monetary Authority. Operating expenses and loan impairment charges partially offset profit gains. The classified loan ratio for the sector rose by 23 basis points to 1.79%, with mainland-related loans increasing to 2.77%. Residential mortgage delinquency slightly increased to 0.09%. Meanwhile, net interest margins declined to 1.53%. BOC Hong Kong noted pressures on margins due to subdued expectations for major US interest rate cuts, maintaining a stable bad loan ratio and confirming a dividend payout ratio of 40-60%.