Hong Kong’s banks are heading into 2026 with a cushion of capital and liquidity, and a fresh set of growth levers as markets thaw.
KPMG said its latest Hong Kong Banking Outlook 2026 is more constructive on the sector after a stronger equity market in 2025 lifted sentiment and dealmaking expectations.
The firm expects lenders to channel balance-sheet capacity toward areas offering the best risk-adjusted returns, led by wealth management demand and a pick-up in initial public offerings.
“As we enter 2026, KPMG is more optimistic about Hong Kong’s banking sector,” said Paul McSheaffrey, senior banking partner for Hong Kong at KPMG China.
He pointed to policy efforts aimed at strengthening the city’s fixed-income market and supporting mainland Chinese companies expanding abroad via Hong Kong as additional tailwinds, adding that higher investment and hiring could follow.
The report frames artificial intelligence as moving from an efficiency layer to a competitive requirement.
Jianing Song, KPMG China’s head of banking and capital markets in Hong Kong, said banks are increasingly measuring AI’s return on investment and embedding it across operations.
In corporate banking, that could hasten the decline of paper-based processes, including physical signatures and batch processing.
Digital assets are another pillar. KPMG said tokenisation is shifting beyond pilots as banks conduct real-world transactions using tokenised deposits under the Hong Kong Monetary Authority’s Project Ensemble, alongside a wave of stablecoin licence applications and tokenised gold issuance.
As regulation becomes clearer, KPMG expects traditional lenders to converge with the digital-asset ecosystem, including by offering custody and expanding tokenised product shelves.
That acceleration also raises the stakes on security. KPMG warned threat actors are increasingly using AI and automation to find vulnerabilities faster, with third-party exposures a growing concern, pushing cyber resilience higher on board agendas.
Technology-risk partner Lanis Lam said banks should prioritise real-time threat detection, governance of external dependencies and tighter integration between technology, risk and business teams, with automation positioned as a core enabler of defence rather than a back-office tool.
Business News Asia
