DBS Hong Kong reported a 1% year-on-year increase in loans to HKD 378 billion last year, while deposits grew by 10% to HKD 522 billion. The non-performing loan (NPL) ratio rose from 1.57% the previous year to 2.16% in the most recent period. Sebastian Paredes, Head of North Asia at DBS and CEO of DBS Hong Kong, anticipates the bank's NPL ratio will trend downwards this year, though no specific forecast was provided. He also projected single-digit growth in the bank's loan portfolio for the year.

Mr. Paredes expects the U.S. Federal Reserve to implement two 25-basis-point interest rate cuts in June and September, totaling a 50-basis-point reduction for the year. Consequently, he indicated the bank's net interest margin (NIM) could potentially decrease by 10 to 12 basis points in 2024. DBS Hong Kong's NIM increased from 1.8% to 1.82% last year.

At a press conference, Karen Chan, Managing Director and Chief Financial Officer of DBS Hong Kong, stated that the rise in the NPL ratio was primarily due to a single mainland Chinese property-related private enterprise. The bank's current exposure to mainland China loans has decreased to 7% of its portfolio, with 5% allocated to state-owned enterprises and less than HKD 1 billion to private enterprises.

Ms. Chan noted that DBS Hong Kong's exposure to Hong Kong commercial real estate (CRE) lending has remained stable at approximately 27% for many years. This portfolio includes financially strong blue-chip companies and entities with investment-grade ratings. The bank maintains a highly cautious approach towards such lending, ensuring adequate provisions are in place, and will continue to seek out high-quality clients.

Regarding Hong Kong's small and medium-sized enterprises (SMEs), Mr. Paredes affirmed DBS Hong Kong's ongoing support for their development. However, he anticipates SMEs will face operational pressures similar to last year, mainly due to Hong Kong residents increasing their spending in mainland China and a trend of mainland tourists downgrading their consumption in Hong Kong. He suggested that as rents for commercial and industrial properties decline, a market equilibrium will gradually be reached. This adjustment is expected to improve the operating environment for SMEs, though achieving this balance may take several years.