With the continuing recovery of the local economy, Hong Kong's banking industry is undoubtedly set to be one of the major beneficiaries. The promising overall outlook should be further boosted by implementation of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and mainland China, which is designed to stimulate business and should result in more companies seeking bank loans.
Encouraging official figures show credit card charge-off (non-performing credit card loans disposed of by banks) dropped from 13.5 percent in the fourth quarter of 2002 to 8.2 percent in the same period of 2003 and the residential mortgage delinquency rate last year fell from May's 1.16 percent to 0.86 percent in December. Monthly bankruptcy petitions declined from 2,311 cases to 1,291 during the same period.
Paul Tang, chief economist of the Bank of East Asia, predicts banking business will expand this year with loan demand on the rise and loan default cases falling from double to single digits in percentage terms.
With sentiment improving, Mr Tang says, banks have become more aggressive in offering loan facilities. "In granting personal loans, for instance, banks find themselves facing less risk as they can now seek information about individual borrowers through the Personal Credit Bureau. Low interest rates have also prompted more applications for personal loans."
Betty Chan, CITIC Ka Wah Bank's head of corporate relations, adds that investment houses' positive forecast for GDP growth from four to seven percent in 2004 and the unemployment rate falling to the current 7.3 percent from last year's record 8.7 percent are viewed as positive economic indicators by the banking industry.
She says the implementation of CEPA has benefited local industries like tourism, retail, manufacturing and logistics. Turnover in these sectors has seen signs of improvement with more corporations now seeking financing for expansion. Demand has, therefore, been created for relationship managers in wholesale banking and financial planners providing wealth management services for high net worth individuals.
Endorsing these views, Mr Tang adds that: "The banking industry no longer sticks to traditional functions. Banks offer many financial products involving insurance, savings and bonds to cater to clients' needs - the trend towards diversity will continue. There is a need for people with excellent communication skills, relevant experience and knowledge to sell these products. Ideally, candidates should have a good grasp of finance and a thorough understanding of different bank products."
Local bankers still have a vital role to play in the mainland market, as Chinese banking does not yet measure up to international standards. Many Chinese state-owned corporations have thus opted to be listed in Hong Kong, an obvious vote of confidence for local financial prospects, according to Mr Tang.
In January 2004, Hong Kong banks were given the green light by mainland authorities to start offering limited RMB banking services. Mr Tang says local banks only act as a middleman in the new arrangement since the currency they handle is for settlements with the Bank of China and not for alternative investments. He believes local banks will need time to gain experience in these transactions and a further relaxation of the regulations to derive practical benefits from the services.
With CITIC Ka Wah Bank now applying to open a branch in Shanghai and establishing a presence in Shenzhen through its newly acquired China International Finance Company Limited (Shenzhen), Ms Chan predicts a demand for frontline bank managers with good financial knowledge of China to cope with future developments. Under the CEPA agreement, the assets' requirement for foreign banks planning to establish branches in China has been cut from US$20 billion to US$6 billion.
Fendi Tsang, CITIC Ka Wah Bank's head of human resources services, says they recruited 15 trainees last year from over 1,000 applications and plan further hiring in 2004. Such a practice is important for major banks as a means of finding new blood and fulfilling social responsibility, according to Ms Tsang.
CITIC Ka Wah Bank trainees start as either a relationship officer trainee dealing with corporate clients or a financial services trainee performing wealth management services for retail customers. They undergo four months' action-packed classroom and on-the-job training to equip themselves with comprehensive knowledge of regulations, banking operations and products. They also perform various market surveys and participate in bank-wide communication functions and other experimental learning to foster personal development.
"We have tailor-made programmes to cope with our business development," Ms Tsang explains. "We also have 'Buddies' to provide on-the-job training and personal support for new recruits, most of whom are university graduates with no work experience. Some, though, have already obtained relevant licences to prepare for entering the banking sector. With this programme, they appreciate and value the opportunity for practical training in the workplace.
"Our support won't cease even after the trainee has established a solid foundation. Coaching will continue to cater for their further enhancement in both technical and personal aspects in dealing with actual work issues to prepare them to render best-in-class services."
Ms Tsang points out that a successful banker must be ready to pursue life-long learning and study continuously to keep up with the new rules and regulations and latest market developments in the ever-changing banking industry.