[Local Bank] Fubon Bank: Commercial real estate in Hong Kong accounts for only about 6% of total loans, not creating significant pressure; this year focusing on consumer loans

Fubon Bank (Hong Kong) CEO and Managing Director Zhong Guoqiang stated that loans related to Hong Kong commercial real estate (CRE) account for only about 6% of the bank’s overall loan portfolio, posing little pressure on the overall loan mix. He mentioned that the loan impairment losses (after bad debt recoveries) in Fubon Hong Kong’s third phase last year were HKD 320 million, mostly related to CRE, “because after we dispose of (sell) the collateral properties, there is still a shortfall (between the sale proceeds and the loan), so we make impairments.”

Looking ahead to the CRE outlook this year, Zhong Guoqiang said that Hong Kong commercial office buildings still face oversupply, but believes some owners will consider converting commercial offices into student dormitories. If these owners seek funding support from the bank, the bank will actively consider it.

Zhong Guoqiang also stated that this year the bank’s net interest margin faces downward pressure. The bank will take multiple measures to respond to this, including moderately expanding the loan and investment portfolio, especially increasing unsecured consumer loans, which accounted for only about 1% of the total loan portfolio last year. Additionally, the bank aims to increase fee income and will continue to focus on precise expense management.

Wang Haoren, Executive Vice President and CFO of Fubon Bank (Hong Kong), said that the proportion of retail customer deposits has increased from 54% in December 2021 to over 90% by December 2025, with a compound annual growth rate of 33.9% over the four years from 2022 to 2025.

Fubon Hong Kong’s profit increased by 52% last year, benefiting from higher revenue and reduced impairment losses

Fubon Bank (Hong Kong) benefited from increased revenue and reduced impairment losses last year, with a net profit of HKD 1.38 billion, up 52% year-on-year. Driven by a 17% increase in average interest-earning assets, net interest income rose 12% to HKD 2.89 billion. Non-interest income increased by 13% to HKD 430 million. Income from insurance business, net income from financial marketing, and fee income from lending all grew by 33%, 31%, and 25%, respectively.

The third phase of loan impairment losses (after bad debt recoveries) was approximately HKD 320 million. The group recorded a recovery of HKD 27 million in loan impairment losses in the first and second phases, while making provisions of HKD 33 million for impairment losses on other financial instruments. The significant decrease in impairment losses reflects improved asset quality, aided by the group’s strategic focus on maintaining higher credit quality risk appetite. As of December 31, 2025, the impairment loan ratio, including commercial paper and interbank loans, was 0.74%, with an impairment loan coverage ratio of 81%.