Rate cut uncertainty remains, KPMG: High interest rate environment benefits the profitability of Hong Kong banks

Recently, KPMG released the 2024 Hong Kong Banking Industry Report, stating that due to the higher interest rate environment in 2023, Hong Kong banks saw a moderate growth in their balance sheets, with significant increases in net interest margin and operating surplus. KPMG believes that with interest rates possibly remaining higher than expected, the banking industry will continue to benefit. However, the timing and extent of interest rate cuts still remain uncertain, and banks should formulate corresponding strategies to address this. For banks with a broader involvement in the capital markets, a rate-cutting environment will bring favorable support. Looking ahead, the speed and strength of Hong Kong's economic recovery from the continued impact of the COVID-19 pandemic will be another key factor