Composite Interest Rate: End of August 2024
The Hong Kong Monetary Authority (HKMA) announced today (20 September)
the composite interest rate at the end of August 2024. 1
The
composite interest rate, which is a measure of the average cost of
funds of banks, decreased by 6 basis points to 2. 52% at the end of
August 2024, from 2. 58% at the end of July 2024 (see Chart 1 in the
Annex). The decrease in composite interest rate mainly reflected the
decreases in the weighted funding cost for deposits and interbank
funds during the month (see Chart 2 in the Annex). 2
The
historical data of the composite interest rate from the end of the
fourth quarter of 2003 to the end of August 2024 are available in the
Monthly Statistical Bulletin on the HKMA website (www. hkma. gov. hk).
Hong Kong Monetary Authority 20 September 2024
Annex
Chart 1
End-of-period figures.
Chart
2
End-of-period figures.
1 The composite interest rate
is a weighted average interest rate of all Hong Kong dollar interest-
rate-sensitive liabilities, which include deposits from customers,
amounts due to banks, negotiable certificates of deposit and other
debt instruments, and all other liabilities that do not involve any
formal payment of interest but the values of which are sensitive to
interest rate movements (such as 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 Since June 2019, the composite interest rate and weighted
deposit rate have been calculated based on the new local “Interest
rate risk in the banking book” (IRRBB) framework. As such, these
figures are not strictly comparable with those of previous months.