Best bank:
HSBC
Best equity house:
Merrill Lynch
Best debt house:
HSBC
Best M&A house:
Goldman Sachs
One of the broad trends in local banking in Hong Kong in the past year was the soft, sluggish loan market. Although most banks are able and willing to lend, since cleaning up their balance sheets, demand has remained weak. Pricing and spreads have also suffered. Banks are only able to get 60 basis points instead of the 200bp common in 2000. Mortgage lending is at the lowest for a generation. And it's the same in the wholesale market. Spreads are hardly profitable and unless this improves, the banks that traditionally rely on lending will have to start diversifying their income bases.
The weak market conditions hardly affected HSBC. It is, without question, the most impressive bank in Hong Kong. But in its home market so it should be. In terms of management calibre, franchise, ability to structure its business and the returns it gives to shareholders, it is head and shoulders above the rest. In markets that others found challenging its profits rose an impressive 45%.