(Bloomberg) — Hang Seng Bank Ltd., a Hong Kong lender controlled by HSBC Holdings Plc, posted a jump in impairments in the first half, as the city’s commercial property downturn continues to inflict pain on its banks.
Hang Seng Bank’s credit impaired loans to Hong Kong commercial real estate rose to HK$25 billion ($3.2 billion) as of June 2025, an 85% jump from HK$13.5 billion a year ago. Nonperforming loans reached 6.69% due to “ongoing credit pressure” in the property sector, the lender said. Its shares slumped as much as 7.6% in Hong Kong trading on Wednesday, set for the biggest drop since February.
“The first half of 2025 was demanding with ongoing uncertainties including trade tariffs, sustained high interest rates and prolonged downturn in the commercial property market,” Diana Cesar, chief executive officer of Hang Seng Bank, said in a statement.
Hong Kong’s commercial real estate sector is going through one of its worst slumps in history. The city’s office vacancy rate is likely to hit an all-time high of 18% by year-end 2025, pushing major landlords to keep lowering rents for older properties, according to Bloomberg Intelligence.
The lender said that about a third of its Hong Kong commercial real estate exposure is unsecured and typically granted to strong listed Hong Kong developers, and challenges are largely concentrated in the secured portfolio.
Soured loans at Hong Kong banks increased to a two-decade high of $25 billion at the end of March, Fitch Ratings estimates, based on Hong Kong Monetary Authority figures.
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