Fitch Ratings downgraded Hang Seng Bank's (HKG:0011) viability rating to a from a+, driven by the deterioration in the bank's asset quality and risk profile issues, according to a note by the debt watcher released Friday.
The bank's risk profile is hinged on a concentration of lending in Hong Kong and mainland China with stress concentrated on its business volume and commercial real estate operations in the two markets, the debt watcher said.
Loans at Hang Seng Bank shrank by 14% between the end of 2021 and the end of the first half of 2024 as high interest rates and a weak economy plagued Hong Kong. Commercial real estate loans comprised 19% of loans in the first half.
Fitch also affirmed Hang Seng Bank's long-term issuer default rating at AA- and its short-term issuer default rating at F1+. Outlook on the long-term issuer default rating is stable.
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