Meanwhile, the ratio of bad and doubtful loans, known as the classified loan ratio, continued to rise and stood at 2.01 percent by the end of 2025, slightly higher than the two percent average over the past two decades, HKMA said.
That ratio was also 0.05 percentage points higher than the 1.96 percent registered at the end of 2024, and much higher than the 1.5 percent seen at the end of 2023.
Speaking at a press conference, Arthur Yuen, HKMA’s deputy chief executive, said despite the challenging landscape, credit-related risks are still manageable in the SAR.
“Because certain pockets of the economy are still operating under pressure, we still think that the credit risk landscape will remain challenging for banks this year,” he told reporters.
“But we think that the overall risk landscape is manageable, because there’s no concentration in any particular lenders nor borrowers.”
He said that the HKMA would continue to encourage lenders to offer credit support to small and medium-sized enterprises, to help prop up the economy.
Official data also showed that total deposits in local banks rose by 11.8 percent last year, higher compared to the 7.1 percent annual increase seen a year earlier.
Total loans rose by 2.3 percent year on year, ending a three-year decline and reversing from the 2.8 percent drop seen in 2024.
Net interest margin, or the gap between the rate charged on loans and the interest paid on deposits, remained unchanged at 1.5 percent at the end of last year.
