Hong Kong banks' loan growth slows to 8.4% in August as business sentiment sours

Domestic financing and mortgages took a beating.

Total loans and advances by Hong Kong banks continued to trend downwards after falling by 8.4% to $9.7t (US$1.24t) in August, according to OCBC Treasury Research, which represents the slowest growth since December 2016 on the back of uncertain economic conditions and global tightening.

Loans for use in Hong Kong, which accounted for 65% of total bank lending, decelerated from 9.2% in July to 8.6% in August. “This is mainly attributed to sluggish business sentiment amid trade war concerns, China’s economic slowdown and prospects of higher borrowing costs,” OCBC Treasury Research said in a note.

Also read: Hong Kong bank loan growth may slow to 5% in H2

Demand for mortgage loans may also weaken as housing transactions and prices retreated and all major banks kick-started a new cycle of prime rate hike.

Loans for use outside of the SAR increased by 8.8% which is the weakest showing since January 2017. The slowdown is expected to continue as China’s easing bias and the Fed’s rate hikes will make offshore financing less attractive to Mainland companies, added OCBC.

“All in all, we expect the growth of total loans and advances will slow down to 3%-5% yoy by end of this year.”