The ratings on The Hongkong and Shanghai Banking Corp. Ltd. (HSBC Asia Pacific) reflect the bank's stand-alone profile, which is enhanced by the advantages of its membership in the wider HSBC Holdings Plc group (HSBC group, A+/Stable/A-1). HSBC Asia Pacific profits from its dominant position within the Hong Kong domestic banking sector and its extensive presence within the Asia-Pacific region. Despite a currently difficult operating environment in Hong Kong, characterized by weak loan demand and price competition, the bank continues to report good profitability, diversified earnings, satisfactory asset quality, a stable funding base, and adequate capitalization. These favorable factors are counterbalanced by the modest-to-modestly-high industry risk that characterizes the banking sectors in Hong Kong and other Asian locations. The bank's
