HKMA Says Hong Kong Loan Growth to Slow as China Economy Cools

  • Growth this year may be weaker than January-August pace
  • Lenders have tightened lending amid China's slowdown

Hong Kong bank loans will probably grow this year at almost half the pace in 2014 as the cooling Chinese economy makes lenders more cautious in extending credit, according to the city’s de facto central bank.

Loan growth in 2015 may match or be weaker than the 6.6 percent annualized increase achieved from January to August, Norman Chan, chief executive officer of the Hong Kong Monetary Authority, said in an interview with Sing Tao Daily published Monday. That compares with 2014’s 12.7 percent expansion, according to figures provided by the HKMA.

A spokeswoman for the HKMA confirmed the comments made by Chan in the interview.

China’s slowing economy has dented demand for corporate funds and banks have become more wary before lending, Chan said in the interview. Hang Seng Bank Ltd. has said it’s cautious on the outlook for China’s credit environment. Bank of East Asia Ltd., which has reported higher bad loans in China, is focused on lending to state-owned enterprises and big corporations, Deputy Chief Executive Officer Brian Li said last month.

Chan said he expects the amount of yuan loans to stabilize or increase slightly after China’s central bank devalued the currency in August, damping demand for U.S. and Hong Kong-dollar lending.

China’s economy won’t see a “hard landing” as there’s still room for the country to cut interest rates and the reserve-requirement ratio for banks, he said.

The Chinese statistics bureau reported Monday that gross domestic product rose 6.9 percent in the three months through September from a year earlier. While that beat economists’ estimates for 6.8 percent growth, it was the slowest quarterly expansion since the first three months of 2009, based on previously announced data.

Before it's here, it's on the Bloomberg Terminal.