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The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (January 19) the composite interest rate at the end of December 2008.*
The composite interest rate, which reflects the average cost of funds of banks, dropped by 18 basis points to 0.68% at the end of December 2008 from 0.86% at the end of November 2008 (see Chart 1 in the Annex). This followed a decrease of 42 basis points in November 2008. The drop in the composite interest rate in December 2008 reflected downward adjustments in interbank and time deposit rates (see Chart 2 in the Annex).**
"The ample liquidity in the interbank market, following the substantial increase in the Aggregate Balance of the banking system and subsequently the fall in interbank rates, has led to the consecutive decline in banks' average cost of funds. Looking ahead, the composite interest rate will continue to be influenced by domestic liquidity and global financial market conditions," said Mr Peter Pang, Deputy Chief Executive of the HKMA.
The historical data of the composite interest rate from the end of the fourth quarter of 2003 to the end of December 2008 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for February 19 and will provide the composite interest rate at the end of January 2009.
* The composite interest rate is a weighted average interest rate of all Hong Kong dollar interest bearing liabilities, which include deposits from customers, amounts due to banks, negotiable certificates of deposit and other debt instruments, and Hong Kong dollar non-interest bearing demand deposits on the books of banks. Data from retail banks, which account for about 90% of the total customers' deposits in the banking sector, are used in the calculation. It should be noted that the composite interest rate represents only average interest expenses. There are various other costs involved in the making of a loan, such as operating costs (e.g. staff and rental expenses), credit cost and hedging cost, which are not covered by the composite interest rate.
** During December, HIBORs dropped across-the-board by 35 to 105 basis points.
For further enquiries, please contact:
Peggy Lo, Manager (Communications), at 2878 1687 or
Hing-fung Wong, Manager (Communications), at 2878 1802
Ends/Monday, January 19, 2009
Issued at HKT 16:31
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