Healthy cross-border wealth and capital flows mitigate near-term earnings constraints for Hong Kong banks, Fitch Ratings said in a recent release.

The banks posted double-digit growth in wealth management fees and solid deposit inflows last year due to increased flows, Fitch said.

The trend will persist in 2026, although the pace may moderate due to a high base and geopolitical risks, especially with the Iran conflict, the rating agency said.

Policy efforts and growing IPO activity have helped Hong Kong maintain its status as a regional wealth center, leading to solid growth in nonresident bank accounts, brokerage volumes, and investment product distribution, Fitch said.

Resulting gains in fee and income and a surge in low-cost deposits balance profitability constraints from weak loan demand, lower net interest margins, and higher credit costs due to local commercial real estate exposure, the rating agency said.