Monetary Statistics for October 1998

1 According to statistics published today (November 30, 1998) by the Hong Kong Monetary Authority (HKMA), both total deposits and loans and advances increased in October. Table 1 provides a summary and comparison with earlier months.

Deposits

2 Total deposits increased for the fifth straight month in October, growing by 2.5%, after a 0.9% rise in the previous month. Both Hong Kong dollar and foreign currency deposits increased, by 1.9% and 3.1% respectively. Since the growth of foreign currency deposits outpaced that of HK$ deposits, the share of HK$ deposits to total deposits edged down to 56.7% at end-October, from 57.0% at end-September.

3 Among HK$ deposits, savings deposits grew sharply by 17.2%, while demand deposits rose by 5.8% during the month. However, time deposits fell for the second consecutive month, down by 2.2% in October. There was a notable shift from time deposits to savings and demand deposits. Given the reduction in interest rates during the month, depositors might have become less willing to roll over their term deposits. Improved sentiment in the stock and property markets might also have induced some depositors to place deposits at the shorter end.

4 US$ deposits rose by 2.5%, while non-US$ foreign currency deposits grew by 4.1%. The latter was partly due to the valuation effect of a weaker US dollar to which the Hong Kong dollar is linked. During October, US dollar depreciated by 15.1% against the Japanese yen.

Loans and advances

5 During the month, total loans and advances increased by 3.3%, reversing the downtrend since October last year. Offshore loans rose by 9.9% as a result of the valuation effects from a stronger yen. Domestic loans continued to drop, albeit at a slower pace of 0.5%. Among local loans, loans for trade financing contracted further by 2.0%, while other local loans declined by 0.4%. As HK$ deposits rose but HK$ loans fell, the HK$ loan-to-deposit ratio decreased to 101.6% at end-October, from 104.0% at end-September.

Money supply

6 HK$M1 rose by 2.5% in October, having risen by 1.1% in September. Both HK$M2 and HK$M3 were up by 1.7% during the month. In the twelve months to October, HK$M1 dropped by 13.3%, while HK$M2 and HK$M3 grew by 9.5% and 9.1% respectively.

Note to editor

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

Hong Kong Monetary Authority

30 November 1998