, China
Shanghai, China (Photo courtesy of Li Yang)

Lockdowns, travel bans hurl new headwinds at banks in China, HK

Banks are expected to perform well in Q1, but market risks are on the rise.

The future is not looking great for banks in China and Hong Kong, with intensified lockdown and travel bans over the past few weeks bringing in new problems for the lenders.

Economic indicators point to a sharp slowdown in March despite a 4.8% GDP growth for Q1 2022, according to a report by Jefferies Asia equity analysts Shujin Chen and Sam Wong . PMI new orders fell to its lowest in five years, whilst retail sales fell 3.5% in March, worse than market expectations. 

Unemployment also surged to 6% in March, its highest since 2018, and is expected to worsen in Q2 and Q3 as over 10 million college students graduate and headcounts in many service industries sharply decline.

The chief of these subdued numbers are the more lockdowns and travel banks implemented by the government as part of its zero-COVID push. Over 45 cities, making up 40% of China’s GDP, have reportedly implemented full or partial lockdowns as of 11 April, according to media reports–almost double from the 23 cities just a week earlier.

So far, banks are yet to show ill effects, with Chen and Wong expecting Hong Kong and China lenders to report high-single-digit net profit growth in Q1 2022 over the next two weeks.

“Retail banks face more challenges ahead, as personal loan growth and asset quality are both likely to worsen due to weak consumption and higher unemployment,” they warned.

Follow the link s for more news on

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

Private fund tokens may be the future of investing
Kinexys seeks to keep a token’s sensitive financial information from prying eyes.
More tax perks could drive Philippine SMEs to go ‘green’
The Southeast Asian nation’s 1.1 million small businesses can be a target for green loans. 
Asia struggles with G20 payment targets
The ultimate goal is for cross-border payments to achieve “the speed of the internet.”