Monetary Statistics for December 1997

1. According to statistics published today (26th January) by the Hong Kong Monetary Authority, total deposits rose while loans and advances declined slightly in December 1997. Table 1 gives a summary and comparisons with earlier months.

Deposits

2. Total deposits increased by a modest 0.3% in December, having declined by 0.7% and 1.3% in October and November respectively. HK$ deposits rose by 1.1% while foreign currency deposits dropped by 0.9%.

3. The rise in HK$ deposits was across-the-board. HK$ demand deposits were up by 1.0%, after a sharp decline of 12% in November, while time deposits rose by 0.8%, having decreased by a cumulative 3.8% in the preceding two months. Savings deposits also expanded, rising by 2.3%, after an increase of 2.5% in November.

4. During the month, US$ deposits rose by 0.6%, after increasing continuously by a total of 17.0% from July to November. Non-US$ foreign currency deposits dropped further by 2.5% in December, after falling by a cumulative 7.5% in October and November. The decline in non-US$ foreign currency deposits reflects partly the valuation effect of exchange rate changes, as the US dollar, to which the Hong Kong dollar is linked, appreciated against most other major currencies during the month.

Loans and advances

5. Total loans and advances declined further by 1.5% in December, after decreasing by 0.2% and 2.0% in October and November, respectively. The fall was contributed by a 4.4% drop in offshore loans, which was partly due to the valuation effect of a strong US dollar. On the other hand, domestic loans picked up by 1.1%, following a cumulative decrease of 1.1% in October-November. Of the total credit for use in Hong Kong, loans for trade financing edged up by 0.1%, after falling for four consecutive months, while other loans expanded by 1.2%, reversing a 0.1% decline in the preceding month.

6. During December, HK$ loans registered a rise of 0.7%, after a drop of 1.2% in November, while foreign currency loans fell by 3.1%, having declined by 2.6% in the preceding month. As HK$ deposits expanded at a faster pace than HK$ loans, the HK$ loan-to-deposit ratio declined to 113.3% at end-December, from 113.8% at end-November.

Quarterly analysis of loans for use in Hong Kong by major economic sector

7. During the fourth quarter, domestic credit slowed sharply in an environment of higher interest rates and more cautious bank lending policy. Growth of residential mortgage loans and lending to financial concerns decelerated rapidly to 2.0% and 3.1%, from 8.9% and 7.2% respectively, in the third quarter. Loans to stock-brokers contracted by 65.9% in the fourth quarter, following a growth of 113.1% in the third quarter (which was partly bolstered by new share subscription activities). Loans for building, construction and property development and investment also moderated, rising by 2.5%, while loans for trade financing fell by 2.2%. Meanwhile, loans to the wholesale and retail trades and to the manufacturing sector expanded by 4.6% and 0.1% respectively, after contracting by 2.3% and 3.2% in the preceding quarter.

Money supply

8. All monetary aggregates rose in December, following a contraction in October and November. HK$M1 increased by 1.7% while HK$M2 and HK$M3 were up by 1.1%. For the year as a whole, HK$M1 dropped by 5.1% but HK$M2 and HK$M3 both grew by 9.9%. On a twelve month average basis, HK$ M3 expanded by 19.2% in 1997, compared with an increase of 15.1% in 1996.

Note to editor

9. For enquiries, please contact the Press and Publications Section, Hong Kong Monetary Authority. (Telephone number: 2878 8261).

Hong Kong Monetary Authority

26 January 1998