Traditional Banks - Hong Kong

Hong Kong

In Hong Kong, the Traditional Banks market market is anticipated to witness a significant increase in Net Interest Income, projected to reach €48.40bn in 2024.
Among the various segments, Traditional Commercial Banking is expected to dominate the market with a projected market volume of €37.91bn in the same year.
The Net Interest Income in the country is expected to exhibit a Compound Annual Growth Rate (CAGR) of 1.26% from 2024 to 2029, resulting in a market volume of €51.52bn by 2029.
In the global context, China is poised to generate the highest Net Interest Income, estimated at €3,588.0bn in 2024.
Hong Kong's traditional banks are facing stiff competition from digital banking platforms, forcing them to innovate and offer more convenient services.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks 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. 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.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, 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 and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

Over the past few years, the Traditional Banks market in Hong Kong has been experiencing significant changes and developments.

Customer preferences: Customers in Hong Kong are increasingly seeking digital banking solutions, leading to a rise in online and mobile banking services offered by traditional banks. The convenience and efficiency of digital banking platforms are attracting a growing number of tech-savvy customers who prefer to manage their finances on-the-go.

Trends in the market: One notable trend in the Traditional Banks market in Hong Kong is the shift towards sustainable and socially responsible banking practices. Traditional banks are increasingly incorporating environmental, social, and governance (ESG) criteria into their operations and investment decisions to meet the evolving demands of customers and investors. This trend aligns with the global movement towards sustainable finance and reflects the growing awareness of environmental and social issues among consumers in Hong Kong.

Local special circumstances: Hong Kong's unique position as an international financial hub plays a significant role in shaping the Traditional Banks market. The city's status as a leading financial center in Asia attracts a diverse range of customers, including local residents, expatriates, and multinational corporations. This diversity creates opportunities for traditional banks to offer specialized services tailored to the needs of different customer segments. Additionally, Hong Kong's proximity to mainland China presents traditional banks with opportunities to tap into the vast Chinese market and expand their presence in the region.

Underlying macroeconomic factors: The macroeconomic landscape in Hong Kong, characterized by stable economic growth and low unemployment rates, provides a favorable environment for the development of the Traditional Banks market. The city's robust regulatory framework and strong rule of law enhance investor confidence and support the growth of the banking sector. Moreover, Hong Kong's strategic location and well-established infrastructure make it an attractive destination for international banks looking to establish a presence in Asia. These macroeconomic factors contribute to the overall resilience and competitiveness of the Traditional Banks 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.