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      Assessing, pricing and managing credit risk remains one of the most important core business areas of financial institutions. Banks in Hong Kong are facing a myriad of challenges including a changing regulatory landscape, digital transformation, non-bank financial institution interconnectedness risk, integration of climate risk into credit risk frameworks, leveraging the new Commercial Data Interchange and maximising returns on credit assets.

      In light of these challenges, traditional banking institutions should review their existing credit and lending platforms while continuing to innovate new product offerings to keep up with the rapid pace of change being driven by new entrants to the market. KPMG has a wide spectrum of credit related services and deep expertise to support financial institutions with credit risk management.

      A holistic credit risk approach leads to success

      Institutions that want to achieve these goals should proceed as follows – of course, always in compliance with regulatory expectations:

      • Standardise

        Standardisation and modularisation of data feeds to improve efficiency of the credit lending process and accuracy of data being used for credit risk measurement

      • Analyse

        Identification of new innovative sources of credit data and information and use of advanced analytics methods (machine learning / AI, etc) to drive more informed credit risk models

      • Automate

        Creating a smart credit risk control process to enhance operational processes through robotic process automation, reducing manual touchpoints across the entire credit and lending chain

      • Integrate

        Integration of more advanced straight-through credit approval methods with paperless, more real-time, credit scoring, and efficient and fast credit processes for positive customer experiences while maximising efficiency for the financial institution

      Our expertise and experience

      Our team of experts offer financial institutions and other business entities a holistic approach to meet internal and external requirements in the context of credit risk. Our team is happy to support you with their interdisciplinary know-how in the following areas:

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      Credit Model/Scorecard Development

      Credit risk model development (rating models, credit risk portfolio models, early warning systems, RWA, IRB models etc) including in Excel, Python, SAS and ‘R’

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      Model Validation

      Independent validation and testing of credit risk models

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      Process Optimisation

      Credit risk and credit approval process optimisation, including optimisation of rating development and validation of processes

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      Regulatory Change Management

      Management of regulatory change, such as Basel III final reform data collection and operational requirements for the CR-SA

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      Credit Risk Data Review and Reconciliation

      Data review, data lineage and data reconciliation to provide further confidence on credit related regulatory reporting accuracy

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      Credit and Lending Process Reengineering

      Re-engineer organisational and operational structures related to credit approvals, credit risk scoring and credit management

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      System Implementation

      Help financial institutions with implementation of systems including credit technology related systems, lending platforms, Basel III RWA calculation engines

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      Benchmarking

      Provide credit risk management gap analysis and best practice benchmarking

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      Capital Management

      Credit RWA optimisation and capital management support

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      Credit Risk Compliance Support

      Support on credit related compliance issues and forward looking credit compliance management

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      Stressed Credit Management

      • Identify financial statement misrepresentation and other borrower frauds (Credit Assurance)
      • Identify/execute turnaround or financial restructuring strategies
      • Support creditor sales of loan exposures/portfolios
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      ESG & Climate Risk

      Integration of Climate and ESG into credit risk processes, models, risk appetite, other credit and lending areas

      Insights

      The HKMA’s revisions to the Supervisory Policy Manual
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      The HKMA’s proposed revisions to the Supervisory Policy Manual
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      The guideline reflects changes made to previously published statutory requirements, as well as recent developments in the financial industry.
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      Banks should review their policies to ensure they comply with HKMA’s prudential measures.
      Read more

      Contact us

      Michael Monteforte
      Michael Monteforte

      Partner, Co-Head of Financial Risk Management

      KPMG China

      Robert Zhao
      Robert Zhao

      Partner, Co-Head of Financial Risk Management

      KPMG China

      Gemini Yang
      Gemini Yang

      Partner, Financial Risk Management / Climate & Nature Services Lead

      KPMG China

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      KPMG's Advisory professionals assist clients through a range of services.
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      We focus on what an organization needs to change to achieve measurable improvements to revenue, margin expansion, cost management and capital structures.

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      Find out how KPMG's expertise can help you and your company.

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