Composite Interest Rate : End of September 2009

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

The composite interest rate, which is a measure of the average cost of funds of banks, dropped slightly by 2 basis points to 0.13% at the end of September 2009, from 0.15% at the end of August 2009 (see Chart 1 in the Annex). This followed a decline of 1 basis point in August 2009. The fall in the composite interest rate in September 2009 was brought about by downward adjustments in time deposit rates (see Chart 2 in the Annex).²

"Liquidity in the banking system remained ample and continued to underpin the decline in the average cost of funds of banks. 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 September 2009 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for 19 November 2009 and will provide the composite interest rate at the end of October 2009.

For further enquiries, please contact:
Hing-fung Wong, Manager (Communications), at 2878 1802 or
Natalie Wu, Officer (Communications), at 2878 8246

Hong Kong Monetary Authority
19 October 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 September, time deposit rates fell slightly while HIBORs rose across-the-board by 0.1 to 6 basis points.

Annex

Chart 1

^*End-of-period figures.

Chart 2

^*End-of-period figures.