...Mortgage Loans Resilient: Fitch Ratings expects the quality of Hong Kong banks' mortgages to remain benign. We believe that gradually rising interest rates will have a limited impact on borrowers' interest burden. In addition, the Hong Kong Monetary Authority's (HKMA) seven rounds of macro-prudential measures protect banks against price shocks. The measures provide some flexibility as their potential removal could help soften related impacts. Unemployment will be an important driver for credit losses, but we expect it to remain low. CRE More Vulnerable: Fitch believes the banks' biggest property lending risks are commercial real estate (CRE) and spillover risks. CRE is more vulnerable than residential properties to a slowdown of the economy, as Hong Kong's retail sales outlook remains lacklustre. We believe that a significant portion of CRE lending is China-related, while office demand may be supported by Chinese companies coming to Hong Kong. Spillover Risk: We believe there is significant...
