Small and medium-sized enterprises (SMEs) make tremendous contributions to Hong Kong’s economy. The Hong Kong Monetary Authority (HKMA) and banks have been paying close attention to the operating conditions of SMEs of different industries, with a view to providing bank financing and support for their ongoing development. In recent months, a great deal of effort has been put into implementing the nine support measures for SMEs which were rolled out in March by the HKMA and the Banking Sector SME Lending Coordination Mechanism (Mechanism). We have also exchanged views with over 20 different trade associations and representatives of various industry sectors including transport, construction, real estate agency, and food and beverage sectors etc., through seminars and other events, such as the Banking Sector’s Support Measures for SMEs Seminar co-organised with the Hong Kong Association of Banks (HKAB) and Chinese Banking Association of Hong Kong (HKCBA) in June. Through these events, we have gained a deeper understanding of the needs of SMEs, while promoting better knowledge of the support measures among bank customers.
A total of around 14,000 SMEs had already benefitted from the nine measures in the first four months following their launch, involving an aggregate credit limit of over HK$31 billion. Among these cases, credit reliefs (including principal moratorium and partial principal repayment) were offered to over 4,000 SMEs, involving an aggregate amount of HK$15 billion; and around 4,200 new credit facilities were approved, providing over HK$16 billion to SMEs to meet their cash-flow and business development needs. Banks also offered 5,700 SMEs concessionary credit application and commitment fees or loan interests to ease their financial burden.
While progress has been made by such support measures, we are keenly aware that some SMEs are still facing challenges in their business operations amid uncertainties in the economic environment.
Today, the HKMA and the HKAB established a joint Taskforce on SME Lending to further strengthen the related work at both the individual case and the industry levels. The Taskforce will focus on individual cases of SMEs encountering difficulties when obtaining bank financing. SMEs can raise such cases through the HKMA’s dedicated email account (smelending@hkma.gov.hk) and enquiry hotline (2878 1199) and, as appropriate, the HKMA will refer them to the relevant banks for handling by their dedicated teams. The HKMA will proactively follow up with banks in the process. If some common issues are identified among the cases, the Taskforce will work out appropriate solutions for adoption across the banks. Furthermore, the Taskforce will work to further enhance communication among the HKMA, the banking industry and the commercial sector, so as to understand the financing needs of SMEs in a more timely manner, and to provide better support for the development and transformation of SMEs.
Looking ahead, the HKMA will join hands with the banking sector to step up the support to SMEs in three major directions.
Firstly, we will walk with SMEs in both good and bad times. All major banks re-affirmed today that they would ensure ongoing effective implementation of the nine SME support measures, including banks undertaking not to demand early repayments from mortgage customers repaying on schedule, and not to adjust credit limit merely due to change in collateral value. During difficult times in the past, the banking sector supported SMEs all along and adopted an accommodative approach to helping those customers facing operating difficulties and cash-flow pressure. Meanwhile, it has been the HKMA’s expectation that banks should treat customers fairly and offer services to customers in a transparent, efficient and reasonable manner. And therefore banks should engage customers appropriately to understand their latest positions and needs, with a view to offering suitable products and services. They should also address comments, enquiries and review requests from their new or existing customers properly, and explain clearly any risk assessments and related considerations in relation to loan applications.
Secondly, we will work to enhance information and transparency of bank credit processes. Banks have re-affirmed that they have not changed and will not change their risk appetite towards SME financing and related credit approval standards. When making credit decisions and setting lending terms and conditions, banks will continue to adopt a risk-based approach and take into account the situation of individual customers. To enhance transparency of their credit underwriting processes, all banks participating in the Mechanism are introducing review mechanisms for credit approval decisions. Under such mechanisms, new or existing SME customers can request their banks to review decisions relating to credit applications or credit limit adjustments. The reviews will be conducted by more senior or dedicated officers of the banks, and during the review process, customers will have the opportunity to provide additional information and better understand the considerations behind the credit decisions. If banks take credit actions on individual customers with repayment difficulties that cannot be overcome, they should explain the reasons behind clearly. As for residential mortgage lending, it should be made clear that loan applicants can be informed of the outcome within a reasonable period of time after receipt of necessary documents by the banks. Meanwhile, the HKMA’s SME information platform has been updated to provide more information on banking services for SMEs, including contact details for credit decision review arrangements of individual banks, HKMA’s dedicated email account and enquiry hotline, and hyperlinks to the webpages of HKAB, HKCBA, the Government and related organisations. The enhanced platform aims to facilitate access to information on support for SMEs development in an easier, faster and more comprehensive manner.
Thirdly, we will support SMEs’ upgrade and transformation. To foster their development, apart from relief measures, it is essential to help strengthen the competitiveness of SMEs to cater for evolving changes ahead. The Government and related organisations have offered many funding schemes to support the upgrade and transformation of enterprises, such as the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) and Digital Transformation Support Pilot Programme etc. Besides funding, many SMEs also need tailored and efficient banking services. In view of this, the HKMA will collaborate with banks and other organisations such as Cyberport to assist SMEs’ upgrade, transformation and business development through the use of technology. Moreover, we will continue to support the banking sector in enhancing their adoption and use of fintech and data infrastructure, such as Commercial Data Interchange (CDI) and Interbank Account Data Sharing (IADS), and roll out more services and measures to facilitate SMEs.
The HKMA will continue to monitor banks’ business strategy for supporting SMEs through various means in our supervisory processes. We will collect more granular data relating to SME financing, such as banks’ projections of credit facilities offered to SMEs. The information will enable us to gain a better understanding of the strategy and actual position of banks’ SME-related business and facilitate HKMA’s data-based supervisory work. In addition, for banks active in SME lending, the HKMA will include business strategy for supporting SMEs as a standing discussion item in our meetings with their senior management and board of directors, and conduct thematic reviews, so as to keep in view how banks are striking a balance between ensuring safety and soundness, prudent risk management and supporting the real economy and development of SMEs.
In summary, the HKMA and banks will continue our efforts in supporting SMEs. That said, understandably, it is necessary for banks to maintain consistent and effective risk management to safeguard depositor interests. As such, for cases of prolonged non-repayment despite relief or restructuring provided, actions will inevitably be taken by banks, but they will ensure such actions are implemented and communicated to the customers in an accommodative manner.
Enterprises in Hong Kong have thrived on the unwavering backing of the banking sector. Notwithstanding that the current business environment is full of challenges, the HKMA together with the banking sector will walk with the SMEs.
Eddie Yue
Chief Executive
Hong Kong Monetary Authority
23 August 2024
