Composite Interest Rate : End of October 2009

Press Releases

19 Nov 2009

Composite Interest Rate : End of October 2009

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

The composite interest rate, which reflects the average cost of funds of banks, remained steady at 0.13% at the end of October 2009, the same as that of September 2009 (see Chart 1 in the Annex). This followed a decline of 2 basis points in September 2009. During October, time deposit rates were unchanged but interbank rates dropped slightly (see Chart 2 in the Annex).2

"The composite interest rate remained steady in October 2009. Abundant liquidity in the banking system continued to keep banks' average cost of funds at a low level. Looking ahead, the composite interest rate will continue to be influenced by domestic as well as external liquidity 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 October 2009 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for 17 December 2009 and will provide the composite interest rate at the end of November 2009.

For further enquiries,
Alice Lo, Communications Chief, at 2878 1480 or
Hing-fung Wong, Manager (Communications), at 2878 1802

Hong Kong Monetary Authority
19 November 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 October, interbank rates with maturity of one week or more dropped by 4 to 10 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 : 19 November 2009