Core Viewpoint - There are rumors regarding the establishment of a "bad bank" in Hong Kong to manage non-performing assets, but the Hong Kong Monetary Authority (HKMA) has denied any such plans, emphasizing the overall health of the banking sector and sufficient credit provisions [1][2]. Group 1: Banking Sector Health - The HKMA stated that the banking sector's balance sheets are healthy, with a credit provision coverage ratio exceeding 140% and strong profitability [1]. - As of the first quarter of this year, the total loan amount in Hong Kong's banking sector increased by 0.6% year-on-year, with loans used within Hong Kong rising by 0.8% and those used outside by 1.1% [2]. - The non-performing asset ratio in Hong Kong's banking sector only increased by 0.02% from the end of last year, reaching 1.98%, with residential mortgage non-performing loans at a mere 0.13% as of the end of May [2]. Group 2: Capital and Provisions - Hong Kong banks have ample provisions, with a credit provision coverage ratio of approximately 145% when accounting for the realizable value of collateral against non-performing loans [3]. - The total capital ratio for local banks was reported at 24.2% as of the end of March, significantly above international standards, indicating strong capital strength [3].