Hong Kong banking sector shows resilience, sets 2026 tech and fraud priorities
Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority, presented a comprehensive year-end review of the banking sector for 2025, emphasizing its strong resilience. He also outlined the HKMA's key supervisory priorities for 2026, focusing on operational risks, fintech development, and anti-fraud measures.
Resilience and manageable credit risks in 2025
The Hong Kong banking sector demonstrated strong resilience throughout 2025, maintaining robust capital and liquidity positions.
The aggregate Capital Adequacy Ratio (CAR) stood at 25.1 percent, well above regulatory minimums, while the Liquidity Coverage Ratio (LCR) for Category 1 institutions reached 165.6 percent.
Credit risk remained manageable, with the overall Classified Loan Ratio (CLR) at 1.94 percent, despite a challenging credit landscape.
Loan growth saw a modest 1.7 percent increase, with deposits rising by 5.1 percent.
Supervisory accomplishments included significant enhancements in cybersecurity and operational resilience, alongside progress in developing cross-sectoral cyber threat intelligence.
The HKMA also laid groundwork for new critical infrastructure protection legislation.
Furthermore, a new prudential framework for cryptoassets was implemented from January 1, 2026, strengthening the regulatory landscape for digital assets.
Future-proofing through technology and vigilance
For 2026, the HKMA will prioritize vigilance in the evolving credit landscape, focusing on asset quality and supporting the real economy.
Operational and technology risks are central, with efforts to strengthen cyber resilience and implement new international standards for third-party risk management, especially for cloud adoption.
The Fintech 2030 agenda will advance initiatives in Artificial Intelligence and Distributed Ledger Technology, supported by a holistic risk data strategy.
Anti-fraud efforts will intensify through enhanced collaboration, innovative data analysis, and expanded use of the Scameter.
Investor protection will also be strengthened, focusing on high-yield products and promoting a customer-centric culture.
Proactive stance in a dynamic landscape
This comprehensive review and forward-looking agenda underscore the HKMA's proactive approach to financial supervision in a rapidly evolving environment.
The blend of robust stability metrics with aggressive technological and anti-fraud initiatives positions Hong Kong's banking sector for future challenges.
However, the sheer breadth of priorities suggests a demanding year ahead for both regulators and financial institutions.