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 two years. We expect SCBHK's sound business and risk profile to help the bank offset any potential global economic headwinds. We also anticipate SCBHK will maintain high systemic importance in Hong Kong. In our opinion, the Hong Kong government will be able to provide extraordinary support in the event of need. Alternatively, SCBHK would also receive timely support from the group as a core subsidiary. We could downgrade SCBHK if the Standard Chartered group credit profile deteriorates and SCBHK's stand-alone credit profile (SACP) weakens. The SACP could come under downward pressure if:

...SCBHK's strategic footprint across its key markets of Hong Kong, Korea, China, and Taiwan underscores its pivotal position for the wider group. These markets make up close to about 40% of the Standard Chartered group's assets and revenues. As the group's Greater China and North Asia (GCNA) hub, and with a significant presence in Hong Kong, SCBHK taps into increasing trade, investment, and wealth flows in the region. It also benefits from opening up of China's capital and financial markets. This should continue to help the bank build sizeable cross-border revenues for the wider group. Pressure on asset quality from strained China and Hong Kong property sectors is manageable. The bank has been lowering exposures and adding to provisions in its property portfolio. SCBHK's exposure to commercial real estate (CRE) in China was about 2% of total loans at the end of 2023, lower than our estimated average of about 4% for other major banks in Hong Kong. This will likely limit any significant impact...

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