Banking - Hong Kong

Hong Kong

In Hong Kong, the Net Interest Income in the Banking market is projected to reach €76.56bn in 2024.
Traditional Banks dominate the market with a projected market volume of €48.40bn in 2024.
The Net Interest Income is expected to show an annual growth rate (CAGR 2024-2029) of 2.03%, resulting in a market volume of €84.65bn by 2029.
In global comparison, China is expected to generate the highest Net Interest Income, reaching €4,017.0bn in 2024.
Hong Kong's banking market is thriving due to its robust regulatory framework and strong financial institutions.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the Retail & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

In Hong Kong, the Banking market is experiencing a significant shift driven by changing customer preferences, evolving trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Customers in Hong Kong are increasingly seeking digital banking solutions that offer convenience, efficiency, and personalized services. With the rise of tech-savvy consumers, there is a growing demand for mobile banking apps, online account management, and seamless payment options. Moreover, customers are placing a higher emphasis on data security and privacy in the wake of cyber threats and data breaches.

Trends in the market: One prominent trend in the Banking market in Hong Kong is the emergence of virtual banks. These digital-only banks are disrupting the traditional banking sector by offering innovative products, competitive interest rates, and superior customer experience. Virtual banks are attracting a younger demographic that values flexibility and digital convenience. Additionally, there is a growing trend towards sustainable and socially responsible banking practices, with customers showing interest in green financing and ESG investments.

Local special circumstances: Hong Kong's status as an international financial hub and its proximity to mainland China play a significant role in shaping the Banking market. The city's strong regulatory framework, stable political environment, and well-established infrastructure attract both domestic and foreign financial institutions. Moreover, the increasing integration with the Greater Bay Area initiative is driving collaboration and cross-border opportunities for banks in Hong Kong.

Underlying macroeconomic factors: The low interest rate environment in Hong Kong is influencing the profitability and lending activities of banks. With interest rates at historically low levels, banks are facing margin pressures and are exploring alternative revenue streams such as wealth management and insurance services. Moreover, the economic uncertainties stemming from global trade tensions and the impact of the COVID-19 pandemic have led to cautious consumer spending and investment behavior, affecting the overall performance of the Banking market in Hong Kong.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.