China, Hong Kong banks' profits rise

Chinese commercial banks saw net profit rise 2.3% in 2025 as a key profitability indicator remained at historic lows but held steady in recent quarters, caixinglobal.com reported.

The combined net profit of China's banking sector reached 2.4 trillion yuan ($343 billion) last year, according to data released recently by the State Administration of Financial Regulation. The amount is 2.3% higher than the previous year, according to Caixin's calculations based on official figures. Total assets in local and foreign currencies rose 8% to 480 trillion yuan at the end of December, the source cited noted.

According to scmp.com, Hong Kong's retail banks saw pre-tax profit grow by 7.3% last year as rising non-performing loans and a lower net interest margin offset rising income from wealth management services.

Hong Kong's 30 retail banks saw their aggregate pre-tax profit grow less than in 2024, when it grew by 8.4%, according to data from the Hong Kong Monetary Authority (HKMA). The figures show that the growth was much slower than the 62% jump in 2023, when the city had just reopened its border with mainland China after the Covid-19 pandemic, and the 18.7% growth in 2022.

"Overall, Hong Kong's banking sector remains profitable, and its capital adequacy ratio and other key metrics remain well above international requirements,” said Arthur Yuen Kwok-hang, deputy chief executive of the HKMA.

Local lenders have been hit by a higher proportion of non-performing or doubtful loans as the commercial real estate sectors in both Hong Kong and mainland China face difficulties.

Hong Kong banks' non-performing loan ratio was 2.01% of total loans at the end of last year, slightly above the average of 2% over the past two decades. This rate was 1.96% at the end of 2024, 1.5% at the end of 2023, 1.4% in 2022 and 0.88% in 2021.

"The overall economic sentiment has improved recently,” Yuen said, adding: "However, there are certain industries, such as the commercial real estate sector, that still face many challenges. Therefore, the HKMA will continue to work with banks to manage their asset quality. As banks have made sufficient provisions for non-performing loans and local lenders are profitable, asset quality risk management remains manageable.”

Hong Kong lenders' profitability has been hit by a low net interest margin (NIM) - the difference between the rate charged on loans and the interest paid on deposits - which remained at 1.52% at the end of last year, the same as at the end of 2024. It was 1.67% in 2023, 1.31% in 2022, 0.98% in 2021 and 1.18% in 2020, official data showed.

Total deposits in Hong Kong's banking system grew 11.8% last year, compared with 7.1% in 2024, 5.1% in 2023 and 1.7% in 2022, according to official figures.