Hong Kong banks’ collateral asset valuations to continue declining in 2026: S&P

South China Morning PostEN 1 min read 100% complete by Cao LiFebruary 26, 2026 at 01:18 PM

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S&P Global Ratings predicts that the value of collateral assets used for Hong Kong banks' commercial property loans will continue to decline in 2026 due to the ongoing downturn in the commercial property market that began in 2019. The report highlights falling rents and rising vacancy rates as contributing factors. The Bank of East Asia's recent significant valuation loss in investment properties exemplifies the pressure on collateral valuations. S&P conducted stress tests, including scenarios with 30% and 50% collateral discounts, the latter reflecting recent secondary market sales at substantial losses. The agency suggests that some smaller banks may face increased strain due to these declining valuations.

Key Entities & Roles

Key Player Opposition Context

Bank of East Asia 70% S&P Global Ratings ×390% Hong Kong ×390%

Keywords

collateral asset valuations 90% hong kong banks 80% commercial property loans 70% s&p global ratings 60% property market downturn 60% stress scenarios 50% valuation loss 50% vacancy rates 40%

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Very Negative

Score: -0.60

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South China Morning Post

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90%

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Hong Kong

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collateral asset valuations hong kong banks commercial property loans s&p global ratings property market downturn stress scenarios valuation loss vacancy rates

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