**********************************************
The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (December 18) the composite interest rate at the end of November 2008.*
The composite interest rate, which reflects the average cost of funds of banks, dropped by 42 basis points to 0.86% at the end of November 2008, from 1.28% at the end of October 2008 (see Chart 1 in the Annex). This followed an increase of 10 basis points in October 2008. The decrease in the composite interest rate in November 2008 reflected the downward adjustments of interbank and time deposit rates (see Chart 2 in the Annex).** Liquidity conditions in the interbank market have improved following the market operations and various measures taken by the HKMA. Looking ahead, the composite interest rate is expected to continue to be influenced by global financial market conditions.
The historical data of the composite interest rate from the end of the fourth quarter of 2003 to the end of November 2008 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for January 19, 2009 and will provide the composite interest rate at the end of December 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 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 November, HIBORs dropped across-the-board by 5.4 to 139.5 basis points.
For further enquiries, please contact:
Thomas Chan, Communications Chief, at 2878 1480 or
Peggy Lo, Manager (Communications), at 2878 1687
Ends/Thursday, December 18, 2008
Issued at HKT 18:08
NNNN