Macau’s banks increasingly exposed to China

27 May 2013

The growing exposure of Macau’s banks to China may deteriorate their risk profile, according to the latest report on the territory’s banking sector from credit rating agency Fitch Ratings.

According to Fitch’s report, the agency expects loans to increase by 30 percent in 2013, after a 26 percent rise in 2012, mainly due to financing trade with China.

At the end of 2012, Macau banks’ exposure to China stood at around 16 percent of total assets according to official figures, with Fitch Ratings noting that indirect loans were not accurately accounted for in the figures.

According to the report, the Macau banking sector’s exposure to China, including both direct and indirect loans, against total assets is expected to be similar to that of Hong Kong’s banks, which at the end of 2012 stood at 25 percent.

The credit rating agency added that Macau’s banks were also exposed to China’s risk by providing loans to the gaming sector, whose gross revenues are mainly provided by tourists from mainland China.

At the end of 2011, the Bank of China dominated Macau’s banking system with 43.46 percent of total assets, 40.47 percent of loans and 33.07 percent of deposits. (macauhub)