Hong Kong Monetary Authority Reports Slight Increase in Composite Interest Rate for June 2024

The
Hong
Kong
Monetary
Authority
(HKMA)
has
reported
a
marginal
increase
in
the
composite
interest
rate
at
the
end
of
June
2024.
According
to
the
HKMA,
the
rate
rose
by
1
basis
point
to
2.62%,
up
from
2.61%
at
the
end
of
May
2024.
This
increase
primarily
reflects
the
higher
weighted
funding
cost
for
deposits
during
the
month.

Composite
Interest
Rate
Overview

The
composite
interest
rate
is
a
measure
of
the
average
cost
of
funds
for
banks
in
Hong
Kong.
It
is
a
weighted
average
interest
rate
of
all
Hong
Kong
dollar
interest-rate-sensitive
liabilities,
including
customer
deposits,
amounts
due
to
banks,
negotiable
certificates
of
deposit,
and
other
debt
instruments.
The
rate
also
considers
non-interest-bearing
demand
deposits
sensitive
to
interest
rate
movements.
Retail
banks,
accounting
for
approximately
90%
of
total
customer
deposits
in
the
banking
sector,
contribute
data
for
this
calculation.

Factors
Influencing
the
Rate

The
HKMA
noted
that
the
latest
increase
in
the
composite
interest
rate
was
mainly
driven
by
a
rise
in
the
weighted
funding
cost
for
deposits.
This
trend
is
depicted
in
Chart
1
and
Chart
2
of
the
HKMA’s
official
release,
which
illustrate
the
end-of-period
figures
for
the
composite
interest
rate
and
the
weighted
deposit
rate,
respectively.

Historical
Data
and
Methodology

Historical
data
for
the
composite
interest
rate,
dating
back
to
the
end
of
the
fourth
quarter
of
2003,
is
available
in
the
Monthly
Statistical
Bulletin
on
the
HKMA’s
website.
It
is
important
to
note
that
since
June
2019,
the
composite
interest
rate
and
the
weighted
deposit
rate
have
been
calculated
based
on
the
new
local
“Interest
rate
risk
in
the
banking
book”
(IRRBB)
framework.
As
a
result,
these
figures
are
not
directly
comparable
with
those
from
earlier
periods.

For
more
detailed
information,
the
full
announcement
and
charts
can
be
accessed
on
the

HKMA
website.

Image
source:
Shutterstock