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Composite Interest Rate: End of August 2016
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The following is issued on behalf of the Hong Kong Monetary Authority:

     The Hong Kong Monetary Authority (HKMA) announced today (September 20) the composite interest rate at the end of August 2016.*

     The composite interest rate, which is a measure of the average cost of funds of banks, decreased slightly by 1 basis point to 0.25% at the end of August 2016, from 0.26% at the end of July 2016 (see Chart 1 in the Annex). The decrease mainly reflected a slight decline in the weighted funding cost for deposits during the month (see Chart 2 in the Annex).

     The historical data of the composite interest rate from the end of the fourth quarter of 2003 to the end of August 2016 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk).  The next data release is scheduled for October 19, 2016 and will provide the composite interest rate at the end of September 2016.
 
* 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.
 
Ends/Tuesday, September 20, 2016
Issued at HKT 16:30
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Annex