...Hong Kong banks' profitability in the first half of 2009 was weighed down by narrower net interest margins (NIMs), weak fee income, and elevated credit costs amid an adverse economic backdrop. NIMs fell due to the low interest rate environment, weak credit demand, ample interbank liquidity, and the banks' preference for liquid and lowrisk investments. Credit costs rose (albeit slowly and from a low base) amid increased unemployment and a decline in trade flows through Hong Kong and southern China. Although loan quality deteriorated during the first half of 2009 (particularly in the manufacturing and trading sectors which were most vulnerable to the slowdown in external demand), it remains manageable, reflecting the lack of any major asset bubbles in Hong Kong prior to the crisis, low prevailing interest rates, the banks' conservative approach to lending, a prudent regulatory regime (particularly in regard to bank capital and collateral), a spillover from the strong recovery in mainland...
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| Company(ies): | Chong Hing Bank Ltd, Nanyang Commercial Bank Ltd., Hongkong & Shanghai Banking Corporation, Dah Sing Bank Ltd., Bank of China (Hong Kong) Limited, Shanghai Commercial Bank Ltd., Citic Ka Wah Bank Limited, Industrial and Commercial Bank of China (Asia) Limited, DBS Bank (Hong Kong) Limited, Wing Hang Bank Ltd., AIG Finance (Hong Kong) Ltd., Hang Seng Bank Ltd.
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