Composite Interest Rate: End of December 2024
The Hong Kong Monetary Authority (HKMA) announced today (17 January)
the composite interest rate at the end of December 2024. 1
The
composite interest rate, which is a measure of the average cost of
funds of banks, increased by 4 basis points to 2. 24% at the end of
December 2024, from 2. 20% at the end of November 2024 (see Chart 1 in
the Annex). The increase in composite interest rate mainly reflected
the increase in the weighted funding cost for deposits 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 December 2024 are available in the Monthly Statistical
Bulletin on the HKMA website (www. hkma. gov. hk).
Hong Kong
Monetary Authority 17 January 2025
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.