Hong Kong banks' viability ratings will withstand ongoing commercial real estate (CRE) market pressures through 2025, Fitch Ratings said in a Wednesday release.

The rating agency's stress tests show potential downgrades would be minimal, due to the banks' strong capital reserves that should cushion credit losses.

Rising interest rates and inconsistent economic growth have impacted the CRE sector, especially offices and retail, leading to persistent dampened vacancy rates, Fitch said.

Given this scenario, Fitch expects impaired loan ratios to surpass its initial estimates, but the impact on overall standalone credit profiles should remain steady.

Strong underwriting practices, proactive risk management, consistent earnings, and robust capitalization support the Hong Kong banking system, Fitch said.

Regulatory oversight further strengthens the banks' capacity to navigate economic fluctuations, the rating agency said.