HKMA Annual Report 2004

The Hong Kong Monetary Authority (HKMA) today (Tuesday) published its Annual Report for 2004. The Report reviews trends and events in monetary and banking affairs and reports on the HKMA's work during the year. It also sets out plans for the coming year.

In his statement on the Annual Report, Mr Joseph Yam, Chief Executive of the HKMA, said that, during the year, the Hong Kong dollar had stayed close to its official Linked Rate of 7.8 to the US dollar, despite the massive fund flows, persistent speculation about a renminbi revaluation, and the decline in the external value of the US dollar.

Hong Kong's banking sector had seen an average 20% increase in profitability in 2004 although interest margins continued to squeeze, largely as a result of the ample liquidity in the banking system. All other main indicators had shown improvements, reflecting better economic conditions and increased economic activity. "Economically speaking, Hong Kong had a very good year in 2004: in the absence of any unforeseen crisis, there are good reasons for expecting that the healthy and sustained progress made during the year will continue, although growth may be at a more moderate pace," said Mr Yam.

The Annual Report contains the audited Exchange Fund accounts for 2004. The Exchange Fund, which is managed by the HKMA, earned an investment income of HK$56.7 billion in 2004, and a rate of return meeting that of the investment benchmark set by the Financial Secretary on the advice of the Exchange Fund Advisory Committee (EFAC).

Other developments in 2004 included the introduction of renminbi banking services; the enactment of the Deposit Protection Scheme Ordinance and the Clearing and Settlement Systems Ordinance; the issue of new $20, $50 and $1,000 Hong Kong banknotes; and the announcement of the structuring, design and launch of the local currency component of the Asian Bond Fund under the Executives' Meeting of East Asia and Pacific Central Banks.

During 2004 the governance arrangements of the HKMA were strengthened with an expansion of the EFAC sub-committee system. A new Governance Sub-Committee was created, replacing the old Remuneration and Finance Sub-Committee, with the task of monitoring the performance of the HKMA and making recommendations to the Financial Secretary, through EFAC, on governance issues affecting the HKMA. Two new sub-committees, one on investment and the other on financial infrastructure, were formed to focus on technical details of these important areas of the HKMA's work.

The HKMA Annual Report 2004 may be purchased in hard copy at the HKMA Information Centre or by post at HK$100 per copy. A mail order form for the purchase of the Report is available on the HKMA's website. The Report is also available in interactive form on the HKMA's website http://www.info.gov.hk/hkma/ar2004/english/index.htm. Accompanying the Annual Report is a separate publication, An Introduction to the Hong Kong Monetary Authority, which contains the summary version of the Annual Report: this booklet is available free of charge at the HKMA Information Centre.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 28788246
Thomas Chan, Senior Manager (Press), at 28781480

Hong Kong Monetary Authority
19 April 2005