Hong Kong’s eight digital banks have vowed to expand their wealth management businesses in the coming years, after five successful years of drawing customers’ deposits gave them the confidence to venture further into a territory long dominated by bricks-and-mortar banks.
All eight of the branchless lenders reported a strong increase in deposits, loans and net interest income in 2024. They did not report a net profit, but their losses narrowed due to improved net interest income and fee income from their wealth management businesses, according to separate announcements on Thursday.
In 2019, the Hong Kong Monetary Authority (HKMA) issued eight virtual bank licences. In October, the HKMA relaxed its rule to allow them to have a limited number of branches, but to date, none of the companies have opened their physical doors.
In 2020, ZA Bank, WeLab Bank, Mox Bank, Ant Bank, Livi Bank, PAO Bank, Airstar Bank and Fusion Bank commenced operations. The Covid-19 pandemic helped them grow because people were working from home.
The eight digital banks had attracted a combined HK$64.39 billion (US$8.3 billion) of deposits as of the end of last year, an increase of 74 per cent from a year earlier, according to a Post calculation.
In 2024, total loans rose 30 per cent to HK$24.73 billion, while net interest income jumped 48 per cent to HK$2.29 billion. Their combined losses narrowed from a year earlier to HK$2.65 billion.
ZA Bank said it achieved a monthly income gain in July last year, while WeLab Bank reported a first-quarter profit. Both lenders did not provide details on their earnings.
ZA Bank has reported having 800,000 customers and HK$19.4 billion in deposits, followed by Mox Bank with 650,000 customers and HK$17.3 billion in deposits. The other lenders have not been more specific, though their deposits range from HK$2.4 billion to nearly HK$7 billion.
Mox Bank has offered the largest amount of loans at HK$6 billion, followed by ZA Bank at HK$5.6 billion and WeLab Bank at HK$5.5 billion in 2024.
ZA Bank CEO Calvin Ng said the lender was seeking to increase its customer base to 1 million this year. At present, it offers access to 170 funds from more than 20 fund firms, including Allianz Global Investors and Franklin Templeton.
“The US tariff policies have created market uncertainties recently, but we have still seen customers [with] strong demand for investment products,” Ng said in an interview last week. “They would like to invest in different fund products to diversify their portfolios and achieve long-term gains.”
WeLab Bank said its wealth management services and mainland Chinese investors were its growth drivers.
“With 68 per cent of prospective mainland Chinese travellers citing managing their personal financial needs as the primary purpose for their visits [to Hong Kong], we tailored our digital offerings to this emerging customer segment,” WeLab Bank said in its results statement. It also said its mainland visitor growth improved by eight times in the second half of last year from the first half.
“This momentum continues into 2025, establishing this segment as a key driver of new customer acquisitions,” WeLab said.
Mox Bank said it would enhance its wealth management business and lending products this year, according to its results statement.
“The eight digital banks have done very well in building up their customer bases, but they need to do better at activating that customer base,” said Benjamin Quinlan, CEO and managing partner of Quinlan & Associates, a Hong Kong-based consultancy.
Quinlan said the digital banks should team up with partners to sell services and products to customers.
“The digital banks have very strong visibility into the payment and transaction data of individuals, so they can use that to cross-sell products to the customers,” he said.
Lawmaker Robert Lee Wai-wang, who is also the chairman of Hong Kong-based Grand Finance Group, said the city’s digital banks could consider expanding in the Greater Bay Area.
“The eight digital banks have a good start in Hong Kong in their first five years of operation,” Lee said.
The Greater Bay Area is a Beijing-driven project that seeks integration between Hong Kong, Macau and nine mainland cities in Guangdong province.
“By expanding their services beyond Hong Kong, these lenders can tap a bigger pool of customers,” he said.
