The novel coronavirus swept the Hong Kong community in the past few weeks. The Hong Kong economy has already been shrinking since the middle of last year, and unfortunately the public health crisis adds fuel to the fire. In particular, the catering, retail, and tourism industries are bearing the brunt of the storm. The usual hustle and bustle in shopping centres and on the streets are hardly seen these days.
However, tough times often bring out the best in people. In the face of unprecedented challenges, numerous people working in different sectors are standing fast in their respective roles and continuing to provide emergency and necessary services to the public. The financial industry, as an essential pillar of support for our economic activities, is also working hard alongside everyone else and trying their best to serve corporates and the public during this difficult time. Banks, e-wallet operators, and other financial institutions, while ensuring the well-being of their staff and customers, are doing their utmost to maintain normal operation of their core functions to ensure the smooth running of society and the economy. The professionalism they have displayed is worthy of our respect.
To reduce the risk of infection within the community, a number of banks have activated contingency plans and special work arrangements, including the suspension of services in some of their branches, which inevitably have affected the public to varying degrees. The banks have announced on their websites details of the operational arrangements of their branches and set up customer service hotlines to handle customer enquiries. In addition, the Hong Kong Association of Banks is displaying on its website regular updates of the operational situation of bank branches across Hong Kong. At present, over 70% of bank branches are still providing services to the public while ATMs across the city are functioning as usual. We hope the public would understand that the banks made the hard decision to suspend some of their branch services temporarily because of the current exceptional circumstances. The HKMA will maintain a close dialogue with the banking industry on appropriate arrangements and contingency plans having regard to the developments of the outbreak. Banks will notify their customers as soon as practicable if they need to adjust their branch services.
Besides banking services, the HKMA is also very concerned about the cash-flow problem facing small and medium-sized enterprises (SMEs), which form an important pillar of Hong Kong’s economy and employment, amid the current difficult economic environment. I am therefore very pleased to see that many banks have responded to the HKMA’s call and introduced a slew of relief measures in recent days to help personal and corporate customers who are adversely affected by the outbreak to ride out the storm. These measures include a waiver of handling charges under the SME Financing Guarantee Scheme, principal moratorium for property mortgage loans, fee reduction for credit card borrowing, and restructuring of repayment schedules for corporate loans. These measures can effectively ease the pressure on customers experiencing a tight cash flow problem, and lessen the negative economic impact of the outbreak. The HKMA welcomes such initiatives and encourages other banks to follow suit to support their customers during this challenging period. The HKMC Insurance Limited has also clarified that it will adopt a flexible approach to applications for a principal moratorium from customers with mortgage insurance.
I fully understand that under the present unusual circumstances, banks may encounter some difficulties in their daily operations or in meeting regulatory requirements. For example, banks may need more time to prepare their supervisory returns, financial statements, and so on. The HKMA’s door is always open and banks are free to discuss any concerns with us. We will do our best to address their concerns and work with them on suitable solutions while safeguarding the principle of prudent supervision.
During this tough time, my HKMA colleagues and I will continue to do our very best to discharge our duties in a professional manner, so as to deliver on our mandate of ensuring the soundness and stability of the monetary and banking systems in Hong Kong. Our endeavour over the years to prepare for a rainy day has built a solid foundation and strong buffers for Hong Kong’s monetary and banking systems. In addition to the vast foreign exchange reserves we have, our banking system is highly capitalised, with abundant liquidity and good asset quality. We are fully capable of rising up to challenges, including the current outbreak. Indeed, both the Hong Kong dollar exchange rate and interbank interest rates have remained stable. Despite some volatility in the stock market, it has been business as usual in financial market activities and financial infrastructures. This is clear evidence of the robustness of our monetary and financial systems and the strong confidence of the market in Hong Kong.
At the HKMA, we have activated our internal contingency plan to ensure the effective and continued discharge of our critical functions under such exceptional circumstances. In the coming months, the Hong Kong economy may face stronger headwinds. We will keep a watchful eye on the evolving outbreak and economic developments, and will maintain a close dialogue with the banking industry with a view to minimising the service impact on the public and providing further assistance to SMEs where necessary. Rumours may fly around during times of uncertainties. It is therefore important for us to communicate closely with the public to maintain confidence in the monetary and financial systems. At the same time, we urge everyone to stay calm and be rational, guard against unfounded rumours, and keep up good personal hygiene.
Like most Hong Kong people, I went through the scourge of SARS in 2003. We paid a heavy price at the time but learned a valuable lesson: solidarity is the best way to overcome the disease and triumph over adversity. The outbreak this time may be different from SARS, but the same message holds true. Let us embrace Hong Kong’s Lion Rock Spirit, and surely we will ride through the difficulties once again.
Hong Kong Monetary Authority
12 February 2020