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The followng is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (February 19) the composite interest rate at the end of January 2009.*
The composite interest rate, which reflects the average cost of funds of banks, dropped by 26 basis points to 0.42% at the end of January 2009 from 0.68% at the end of December 2008 (see Chart 1 in the Annex). This followed a decrease of 18 basis points in December 2008. The drop in the composite interest rate in January 2009 reflected downward adjustments in time deposit and interbank rates (see Chart 2 in the Annex).**
"The accommodative monetary and interest rate conditions were conducive to the recent declines in banks' average funding cost. 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 January 2009 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for March 19 and will provide the composite interest rate at the end of February 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 January, HIBORs for funds with maturities up to one month and the 3-month HIBOR rose by 3.6 to 21.6 basis points, while the 2-month HIBOR and HIBORs for funds with maturities longer than three months fell by 1.6 to 20.1 basis points.
For further enquiries, please contact:
Thomas Chan, Communications Chief, at 2878 1480 or
Peggy Lo, Manager (Communications), at 2878 1687
Ends/Thursday, February 19, 2009
Issued at HKT 17:31
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