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QINGDAO TODAY
在线翻译:
szdaily -> Business -> 
Hong Kong banks prepare for online-only competition
    2019-08-15  08:53    Shenzhen Daily

HONG KONG’S biggest banks are set to cut fees, boost digital services and jazz up branches with features such as touch-screen display panels to meet competition from new online-only lenders in one of the world’s most profitable banking markets.

As many as eight so-called virtual, or online-only, banks are set to be launched in the city this year, posing the biggest challenge in years to a stronghold for lenders including HSBC and Standard Chartered.

The expected moves show how keen traditional banks are to protect their cash cows even with a short-term hit to their profits, at a time when their growth elsewhere faces hurdles due to a Sino-U.S. trade spat.

And though the virtual lenders are expected by analysts to make only a dent in the business of the incumbents, the big banks are unwilling to take any chances, given that the new breed are backed by some big firms, including Alibaba Group Holding and Ping An.

In an acknowledgement of the looming competition, HSBC said in June it would waive fees on accounts without a certain minimum balance. The British bank said the move was to promote financial inclusion. StanChart, Hong Kong-based Bank of East Asia and others followed with similar moves.

The old guard is also expected to vie to raise deposit rates, further pressuring their profits, sources said.

Hong Kong is a highly profitable banking market. Return on equity for leading Hong Kong banks ranges from 6.5 percent to 15 percent, versus 1.1-13.4 percent in Asia, 0.4-9.2 percent in Europe, and 8.6-15.8 percent in the United States, as per Refinitiv data.

HSBC made US$3.4 billion in pre-tax profits from its Hong Kong retail banking and wealth management operations in the first half of this year, accounting for more than a quarter of the bank’s entire profits for the period.

The bank, which has about a 30 percent share of retail deposits in Hong Kong, has been bolstering its own digital capabilities, said its Asia-Pacific head of retail banking and wealth management, Kevin Martin.

“We’re very aware that competition is increasing and our customers’ expectations are changing and we will ensure we continue to invest ... to meet these challenges and needs.”

StanChart’s US$1.9 billion first-half operating income in Hong Kong represented a quarter of its total operating income. The bank is leading a consortium that has won a virtual banking license.

“As competition increases, there will be some pressures on fees and charges, which will be good for customers,” said Samir Subberwal, StanChart’s regional head of retail banking in China and North Asia.

The new online-only banks include those set up by consortia led by affiliates of Alibaba, Ping An, and Xiaomi, as well as Bank of China Hong Kong.(SD-Agencies)

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