Standard Chartered Bank (Hong Kong) Ltd.

The stable outlook reflects our expectation that SCBHK will maintain its robust business stability, strong capitalization, healthy asset quality, and strong funding and liquidity profile over the next 18-24 months. We expect SCBHK's sound business and risk profile to help the bank offset any potential headwinds from prevailing economic uncertainties mainly stemming from the COVID-19 pandemic and trade tensions. We also anticipate that SCBHK will maintain its high systemic importance in Hong Kong. In our opinion, the Hong Kong government will be able to provide extraordinary support in case of need. Alternatively, SCBHK would also receive timely support from the group. We could downgrade SCBHK if the Standard Chartered's group credit profile deteriorates and if SCBHK's standalone credit profile (SACP)

...Standard Chartered Bank (Hong Kong) Ltd.'s (SCBHK) financial performance to improve closer to pre-COVID levels. In our view, the bank has navigated through the COVID pandemic and other macroeconomic uncertainties, reasonably well. As the economy recovers, we expect SCBHK's profitability to improve with its ROAA (ratio of core earnings to average adjusted assets) improving to be in the range of 0.65%-0.75% over the next two years. Supporting this are potential interest rate hikes, higher level of fee income and decline in provisions. However, a COVID resurgence leading to more-severe-than-expected economic disruptions remains the key risk to our forecasts. No significant impact expected from the recent policy stance in the China property market. SCBHK's exposure to the China commercial real estate exposure is low at about US$4 billion (about HK$31.2 billion) and with about three quarters of it booked in Hong Kong. Also, more than 45% of the portfolio has a loan-to-value ratio of less than...

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