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The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (Wednesday) the composite interest rate at the end of February 2008.*
The composite interest rate, which reflects the average cost of funds of banks, fell by 33 basis points to 1.35% at the end of February 2008, from 1.68% at the end of January 2008 (see Chart 1 in the Annex). This followed a decrease of 61 basis points in January 2008. The fall in the composite interest rate in February 2008 reflected mainly downward adjustments of savings and time deposit rates.** During February, HIBORs rose for funds with maturity of 4 months or less by 0.6 to 99 basis points, while that for funds with maturity over 4 months dropped by 6 to 18 basis points (see Chart 2 in the Annex)***.
ˇ§Looking ahead, the composite interest rate will continue to be influenced by changes in US interest rates and domestic liquidity conditions,ˇ¨ 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 February 2008 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for April 17, 2008 and will provide the composite interest rate at the end of March 2008.
* 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 customersˇ¦ 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.
** Local banks cut their best lending rates on February 1, 2008 by 25 basis points, and adjusted downward their savings deposit rates as well.
*** The rise in short-term HIBORs at the end of February was largely due to the withholding of funds reserved for a major initial public offering at the beginning of March.
For further enquiries, please contact:
Peggy Lo, Manager (Press), at 2878 1687 or
Hing-fung Wong, Manager (Press), at 2878 1802
Ends/Wednesday, March 19, 2008
Issued at HKT 16:31
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