HKMA: Unrecognized property market reversal

HKMA: Unrecognized property market reversal

Property prices have fallen since they peaked in August last year, and have accumulated a cumulative adjustment of nearly 10%. The market is concerned about whether the HKMA will relax the counter-cyclical measures. Vice President Zhai Guoheng said that it has not been able to confirm the reversal of the property market cycle and has no intention to change the current measures in the short term, but will closely monitor the market development.

Bank credit only increased by 4.4%

Guo Guoheng said yesterday that the tightening of mortgages was originally a counter-cyclical measure. Although property prices have fallen by about 10% since last year, they are still not enough to judge the cyclical trend. Therefore, the number of mortgages will not be relaxed at this stage. He continued that the 10% adjustment was not enough to trigger negative assets. The current residential mortgage quality of the banks is good and the overall delinquency ratio is only 0.02%. The future will affect the bank loan quality.

In the short term, although the number of mortgages has not been relaxed, the HKMC has made an exception to provide a guarantee for the “Hong Kong people’s first listing” in Ma Tau Wai Road. For buyers with prices exceeding 6 million, buyers can apply for a maximum of 9 Mortgage loans.

Summarizing the performance of Hong Kong Bank last year, the annual credit growth slowed down to 4.4% from the peak of the peak of June, but the net interest margin widened by 17 basis points to 1.62%. 19%, an increase of 3.7 percentage points from 2017.

Qi Guoheng explained that the credit contraction in July-October last year was mainly due to the decision of some enterprises to delay the investment decision in response to the uncertainties of Sino-US trade, and the stability has been restored since the end of the period. He believes that the situation reflects that the demand for corporate loans depends largely on the development of the external trade environment. “If the Sino-US (trade) negotiations are good, the credit environment is positive.”

This year’s loan demand is based on the development of trade

Looking forward to this year’s loan demand, Yan Guoheng admits that it is difficult to predict the growth. However, the overall industry environment is good, but he is reminded that because he believes that he is currently in the late cycle of the credit cycle, he will ensure that the bank’s regulatory measures are in place in the future. The HKMA’s work this year focuses on operational resilience and technology (see separate article – Welcome to virtual bank licensing key anti-technical risks). The HKMA has conducted a review of 50 banks on the risk of bank program trading. It has found that 40% of banks have used program transactions for investment decisions or placements. In the coming year, banks will conduct special reviews on riskier banks.