Composite Interest Rate : End of June 2009

Press Releases

17 Jul 2009

Composite Interest Rate : End of June 2009

The Hong Kong Monetary Authority (HKMA) announced today (Friday) the composite interest rate at the end of June 2009.1

The composite interest rate, which is a measure of the average cost of funds of banks, dropped further by 5 basis points to 0.19% at the end of June 2009, the lowest level since its inception in December 2003, from 0.24% at the end of May 2009 (see Chart 1 in the Annex). This followed a decline of 3 basis points in May 2009. During June 2009, short-term interbank rates increased, while longer term interbank rates fell (see Chart 2 in the Annex).2

"Despite the temporary tightening of short-term interbank rates due to a series of initial public offerings during the month, liquidity remained abundant and kept banks' average cost of funds at a low level. It is expected that the composite interest rate will continue to be affected by domestic as well as external monetary 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 June 2009 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for 19 August 2009 and will provide the composite interest rate at the end of July 2009.

For further enquiries, please contact:
Thomas Chan, Communications Chief, at 2878 1480 or
Peggy Lo, Manager (Communications), at 2878 1687

Hong Kong Monetary Authority
17 July 2009

1 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.

2 During June, HIBORs for funds with maturities up to two months rose by 0.2 to 7.5 basis points, while that for funds with maturities of three months or longer fell by 0.7 to 4.9 basis points.

Annex

Chart 1

Chart 1
*End-of-period figures.

Chart 2

Chart 2
*End-of-period figures.

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Last revision date : 17 July 2009