Composite Interest Rate : End of April 2009

Press Releases

19 May 2009

Composite Interest Rate : End of April 2009

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

The composite interest rate, which is a measure of the average cost of funds of banks, declined slightly by 2 basis points to 0.27% at the end of April 2009 from 0.29% at the end of March 2009 (see Chart 1 in the Annex). This followed a decline of 4 basis points in March 2009. The decline in the composite interest rate in April 2009 was brought about by downward adjustments in interbank and time deposit rates (see Chart 2 in the Annex).2

"Quantitative easing in the US and strong capital inflows into Hong Kong were the principal factors underscoring the low level of the average cost of funds of banks. Looking ahead, the composite interest rate will continue to be influenced 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 April 2009 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for 18 June 2009 and will provide the composite interest rate at the end of May 2009.

For further enquiries, please contact:
Thomas Chan, Communications Chief, at 2878 1480 or
Hing-fung Wong, Manager (Communications), at 2878 1802

Hong Kong Monetary Authority
19 May 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 April, HIBORs dropped across-the-board by 11.9 to 29.9 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 : 19 May 2009