Composite Interest Rate : End of April 2008

Press Releases

19 May 2008

Composite Interest Rate : End of April 2008

The Hong Kong Monetary Authority (HKMA) announced today (Monday) the composite interest rate at the end of April 2008.1

The composite interest rate, which reflects the average cost of funds of banks, fell by 19 basis points to 0.79% at the end of April 2008, from 0.98% at the end of March 2008 (see Chart 1 in the Annex). This followed a decrease of 37 basis points in March 2008. The fall in the composite interest rate in April 2008 reflected downward adjustments of short-term interbank and time deposit rates, which more than offset the modest rise in funding cost for deposits with maturity over one month, while savings deposit rates were unchanged (see Chart 2 in the Annex).2

"The average cost of funds has declined in recent months along with the fall in US interest rates. Looking ahead, the composite interest rate will continue to be influenced by changes in US interest rates and domestic 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 April 2008 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for 19 June 2008 and will provide the composite interest rate at the end of May 2008.

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

Hong Kong Monetary Authority
19 May 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.

2 During April, HIBORs fell for funds with maturity of one month or less by 2 to 32 basis points, while that for funds with maturity over one month rose by 4 to 53 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 May 2008