The Hong Kong Monetary Authority (HKMA) announced today (17 March) the
composite interest rate at the end of February 2023. 1
composite interest rate, which is a measure of the average cost of
funds of banks, remained unchanged at 2. 17% at the end of February
2023 (see Chart 1 in the Annex) as the weighted funding cost for
deposits was steady 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 February 2023 are
available in the Monthly Statistical Bulletin on the HKMA website
(www. hkma. gov. hk).
Hong Kong Monetary Authority 17 March
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.
2Since 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.
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