Fitch: Hong Kong banks sound

Fitch Ratings said that while Hong Kong banks have seen a decline in their profitability amid the challenging operating environment, they have maintained good asset quality and sound capital adequacy.

Residential mortgage growth has held up well, reaching a record high in mid-2009 as low interest rates and boosted demand for residential properties, Fitch said.

Loan quality deteriorated during the first half of 2009, but it was only a mild deterioration due to various factors, namely, the lack of any major asset bubbles in Hong Kong prior to the crisis, low prevailing interest rates, the banks' conservative approach to lending and a prudent regulatory regime, the agency said.

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