Composite Interest Rate : End of December 2007

Press Releases

17 Jan 2008

Composite Interest Rate : End of December 2007

The Hong Kong Monetary Authority (HKMA) announced today (Thursday) the composite interest rate at the end of December 2007.1

The composite interest rate, which reflects the average cost of funds of banks, rose slightly by 7 basis points to 2.29% at the end of December 2007, from 2.22% at the end of November 2007 (see Chart 1 in the Annex). This followed a decrease of 103 basis points in November 2007. The increase in composite interest rate during the month was partly due to the withdrawal of subscription monies for initial public offerings (IPO) from the deposit base of banks.

"Looking ahead, the composite interest rate will continue to be influenced by short-term changes in liquidity conditions in view of high volatilities in global financial markets and forthcoming IPO activities," 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 December 2007 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for 19 February 2008 and will provide the composite interest rate at the end of January 2008.

For further enquiries, please contact:
Peggy Lo, Manager (Press), at 2878 1687 or
Hing-fung Wong, Officer (Press), at 2878 1802

Hong Kong Monetary Authority
17 January 2008

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.

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 January 2008