Hong Kong banks cut prime lending rates for first time since December

HSBC will trim its prime lending rate for the first time since December, reducing funding costs and providing some relief to businesses and mortgage borrowers in the city.

HSBC, Hong Kong’s largest lender, said on Thursday that its prime lending rate would drop by 12.5 basis points to 5.125 per cent starting on Friday, while its savings rate would be reduced by the same margin to 0.125 per cent per annum for deposits that exceed HK$5,000 (US$640), the bank said. Accounts with less than that amount earn no interest.

Other lenders are expected to announce their rate decisions later on Thursday.

HSBC’s move came after the Hong Kong Monetary Authority (HKMA) earlier on Thursday cut its base rate by a quarter point in lockstep with the overnight cut by the US Federal Reserve. While the HKMA follows the Fed’s moves under the peg-linked system, Hong Kong’s commercial lenders decide their own prime lending and deposit rates.

“We believe the adjustments announced today are appropriate considering the US rates decision and the local market conditions,” HSBC’s Hong Kong CEO Luanne Lim said in a statement.

“Including this reduction, HSBC has lowered its Hong Kong dollar best lending rate by 75 basis points in this rate-cut cycle since September 2024,” she said. “We will continue to monitor the external environment and local economic outlook, and adopt an agile approach when we evaluate future rate decisions.”