The rise of non-performing loans prompts Hong Kong banks to expand teams and accelerate the clearing of bad debts.

The Hong Kong Monetary Authority previously announced that by the end of 2025, the specific classified loan ratio of the Hong Kong banking system will increase to 2.01%. It is reported that bankers responsible for cleaning up non-performing assets are now no longer soft, increasingly resorting to last resort measures, including selling mortgage assets or forcing borrowers to liquidate, largely due to losses in Hong Kong commercial real estate. Arthur YUEN, Deputy Chief Executive of the Hong Kong Monetary Authority, stated that the main driving force behind the recent increase in the specific classified loan ratio was the risk exposure related to mainland private developers in the previous period, and recently it is related to local commercial real estate developers or investors, which will be the focus of supervision this year. Reportedly, the number of experts in this special asset business is less than 200, accounting for less than 0.07% of the total number of financial practitioners in Hong Kong. Their task is to reduce up to HK$200 billion in non-performing assets, which have pushed Hong Kong's non-performing loan ratio to its highest level in 20 years. As the economy recovers in other sectors, the banking industry is expanding these teams, some call it as special credit, recovery and collection, restructuring teams, hoping to seize the opportunity to stop losses and release funds to support new lending. Sources revealed that at least six banks in Hong Kong have expanded the size of their special asset teams, with BANK OF E ASIA and Dah Sing Bank in Hong Kong nearly doubling their staff since 2024, while BOC HONG KONG and Hang Seng Bank have hired more people for teams that originally had over 10 members. A spokesperson for Dah Sing Bank stated that the bank is committed to maintaining the interests of stakeholders while collaborating constructively with challenged customers. Bank Of China and Hang Seng Bank declined to comment, while BANK OF E ASIA did not respond to requests for comment. A banker from a Chinese bank stated that he often works until midnight, with his team simultaneously handling as many as 20 troubled loans, more than double what it was a few years ago. Reports suggest that there is a consensus among the public that the banking industry needs to accelerate and thoroughly address more non-performing loans sooner, and establish momentum for new lending, especially with large infrastructure projects about to kick off.