Hong Kong banks are expected to be more selective in lending to developers amid a prolonged property downturn, posing a major risk to lenders, Moody’s Ratings said. Property development and investment loans accounted for 16% of total bank lending as of June. Moody’s warned that banks’ large exposure to commercial property increases asset risks, with firms like New World Development (NWD) historically securing unsecured loans. Banks’ exposure to NWD represents 1% of gross loans and 8% of property-related lending. Secondary home prices have declined for three consecutive years, falling 27% since 2022. NWD’s net gearing ratio surged to 89% from 55% in June, and it plans to sell HKD13bn in assets by June after posting a record HKD19.7bn loss last year.