ICBC (Asia) sees no undue risk in lending to Hong Kong’s large property developers and will also continue to write home mortgages to support the sector’s recovery, according to a senior executive.
While acknowledging the headwinds in the city’s property sector, such as the emergence of non-performing loans and lukewarm sales, Wang Zhiyong, head of the corporate banking department, said the sector was looking to stabilise amid government support and developers’ initiatives to strengthen business.
The Hong Kong subsidiary of mainland China’s largest bank by total assets counts “leading” developers, including beleaguered New World Development (NWD), as its clients. Those developers were navigating the sector’s challenges “relatively well”, Wang said. “The loan quality is stable, and our willingness to lend is more about stabilising the existing quota,” he added, playing down the possibility of a significant increase in exposure due to risk controls.
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His comment came before a media report that said mainland regulators held a meeting last month to ask the country’s four largest state-controlled banks – including ICBC (Asia)’s parent, Industrial and Commercial Bank of China (ICBC) – to sustain their existing credit lines for NWD and explore additional financing options. ICBC did not respond to the report.
ICBC (Asia) has lent to large developers including NWD, Sun Hung Kai Properties, China Resources Land and China Overseas Land and Investment, according to Bloomberg data.
Wang said his department currently has “zero” non-performing loans from Hong Kong developers, which are mainly blue-chip companies. These companies have low gearing ratios – mostly under 50 per cent. NWD is an exception, as its net gearing ratio rose to 57.5 per cent on December 31 from 55 per cent on June 30, according to its latest interim results.
The bank welcomes discussions with developers to reduce debt or borrowing costs. “We are willing to reduce costs and risks,” Wang said. For example, developers could switch to another currency with lower interest rates, he said. The yuan could be an option as some developers could service the debt with revenue from mainland sales.
For developers with lower debt ratios, the bank would continue supporting their “good” projects and demands, Wang said, without elaborating on the criteria.
