ICBC (Asia) backs Hong Kong developers with stable loan support amid sector's challenges
3 days ago
ICBC (Asia) sees no undue risk in lending to Hong Kong's large property developers and will also continue to write home mortgages to support the sector's recovery, according to a senior executive.
While acknowledging the headwinds in the city's property sector, such as the emergence of non-performing loans and lukewarm sales, Wang Zhiyong, head of the corporate banking department, said the sector was looking to stabilise amid government support and developers' initiatives to strengthen business.
The Hong Kong subsidiary of mainland China's largest bank by total assets counts "leading" developers, including beleaguered New World Development (NWD), as its clients. Those developers were navigating the sector's challenges "relatively well", Wang said. "The loan quality is stable, and our willingness to lend is more about stabilising the existing quota," he added, playing down the possibility of a significant increase in exposure due to risk controls.
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His comment came before a media report that said mainland regulators held a meeting last month to ask the country's four largest state-controlled banks - including ICBC (Asia)'s parent, Industrial and Commercial Bank of China (ICBC) - to sustain their existing credit lines for NWD and explore additional financing options. ICBC did not respond to the report.
ICBC (Asia) has lent to large developers including NWD, Sun Hung Kai Properties, China Resources Land and China Overseas Land and Investment, according to Bloomberg data.
Wang said his department currently has "zero" non-performing loans from Hong Kong developers, which are mainly blue-chip companies. These companies have low gearing ratios - mostly under 50 per cent. NWD is an exception, as its net gearing ratio rose to 57.5 per cent on December 31 from 55 per cent on June 30, according to its latest interim results.
The bank welcomes discussions with developers to reduce debt or borrowing costs. "We are willing to reduce costs and risks," Wang said. For example, developers could switch to another currency with lower interest rates, he said. The yuan could be an option as some developers could service the debt with revenue from mainland sales.
For developers with lower debt ratios, the bank would continue supporting their "good" projects and demands, Wang said, without elaborating on the criteria.
Wang Zhiyong, head of corporate banking at ICBC (Asia). Photo: Aileen Chuang alt=Wang Zhiyong, head of corporate banking at ICBC (Asia). Photo: Aileen Chuang>
"In terms of loan distribution and quota, we try our best to be consistent with customers' needs and ensure security," Wang said. "So if they want to repay the loan early, reduce the quota, and cut down costs, we will fully cooperate and support them."
On the retail side, the bank touted an increase in mortgages extended to Hong Kong homebuyers over the past two years.
Market participants were waiting for home prices to stabilise, Wang said. "A smooth rising curve" would create a win-win situation for developers and homebuyers, he added.
Meanwhile, the bank targeted loan growth of 3 per cent to 6 per cent this year, driven by booming demand in sectors like infrastructure, data centres, new economy, and aviation and shipping leasing, according to Wang.
The goal followed a difficult period in the city, which saw total loans and advances drop 2.8 per cent due to conservative appetites towards construction, development and investment in the sector, according to the Hong Kong Monetary Authority.
The bank's total loans decreased 0.2 per cent to HK$450 billion (US$57.9 billion) on June 30 compared with December 31, 2023. The situation improved since then, with outstanding loans rising 3 per cent in January, Wang said.
"As [China's] policies have driven the economy and stabilised the property and stock markets, I can feel that since the beginning of this year, our credit supply and demand have improved a lot compared to the end of last year," he said.
Supporting mainland China and Hong Kong companies' globalisation efforts would be a focus, Wang added.
"With the rapid development of [artificial intelligence], many Chinese companies are moving to Southeast Asia to build data centres in recent years, including some large mobile operators," Wang said.
In addition, the recovery of the civil aviation businesses after the Covid-19 pandemic, as well as growing shipping needs amid geopolitical tensions, were fuelling the leasing business, Wang said.
The bank is also looking to support China's "new economy", which describes high-growth sectors such as information technology, healthcare and renewable energy. Wang said many big Chinese tech firms had set up bases in Hong Kong, allowing the bank to support their financing demand.
"We have our unique advantages based in Hong Kong, an international financial centre," Wang said. "We provide loans to customers in a wide variety of currencies. Hong Kong has no foreign exchange controls. It is a completely free-trade port."
