Hong Kong banks lift H1 profits on non-interest income growth

The four banks’ net interest margins are expected to improve in H2 2025.

Hong Kong-based banks saw higher profits in the first six months of 2025 on strong non-interest income growth and lower provisions, although net interest income was weaker, according to CreditSights, a Fitch Solutions service.

A sharp HIBOR drop in May and June reportedly pressured the net interest margins (NIMs) of Bank of East Asia (BEA), Dah Sing Bank, China CITIC Bank International (CNCBI), and Nanyang Commercial Bank. Performance varies per bank, however: NIM of Dah Sing Bank rose in H1 2025 compared to H2 2024, but those on Nanyang Commercial Bank, BEA, and CNCBI fell.

Lower lending rates helped push up loans, which rose by 0.8% to 2.6% year-to-date (YTD) except for CNCBI. The latter aggressively expanded its loan book by 8% YTD, versus net contractions in H2 2024, CreditSights noted.

Asset quality metrics showed some improvement during the six-month period, with lower credit costs and NPL ratios and higher NPL coverage ratios. However these remained weak compared to historical levels and their APAC peers, the report said.

For H2 2025, the four banks’ NIMs are expected to improve with the 1M HIBOR rebounding above 3%.

“[However] it also points to renewed headwinds for loan growth and continued stress in [Hong Kong commercial real estate],” CreditSights wrote.

Non-interest income is expected to remain robust in H2 on sustained improvement in market sentiment.