Composite Interest Rate Drops to 2.65% in April 2024, Announces HKMA

The
Hong
Kong
Monetary
Authority
(HKMA)
has
announced
a
decrease
in
the
composite
interest
rate
at
the
end
of
April
2024.
The
composite
interest
rate,
which
gauges
the
average
cost
of
funds
of
banks,
declined
by
8
basis
points
to
2.65%
at
the
end
of
April
2024,
down
from
2.73%
at
the
end
of
March
2024.

Impact
on
Funding
Cost
for
Deposits

The
dip
in
the
composite
interest
rate
is
primarily
attributed
to
a
decrease
in
the
weighted
funding
cost
for
deposits
noted
throughout
the
month.
The
composite
interest
rate
is
a
weighted
average
interest
rate
of
all
Hong
Kong
dollar
interest-rate-sensitive
liabilities.
This
includes
deposits
from
customers,
amounts
owed
to
banks,
negotiable
certificates
of
deposit,
and
other
debt
instruments.
It
also
includes
other
liabilities
which
do
not
formally
pay
interest
but
whose
values
are
sensitive
to
interest
rate
movements,
such
as
Hong
Kong
dollar
non-interest-bearing
demand
deposits.

Historical
Data
on
Composite
Interest
Rate

The
historical
data
of
the
composite
interest
rate,
dating
back
to
the
end
of
the
fourth
quarter
of
2003
up
to
the
end
of
April
2024,
is
available
on
the
Monthly
Statistical
Bulletin
on
the
HKMA
website.
It
should
be
noted
that
the
composite
interest
rate
only
represents
average
interest
expenses
and
does
not
cover
other
costs
involved
in
loan
making
such
as
operating
costs,
credit
cost,
and
hedging
cost.

Since
June
2019,
the
calculation
of
the
composite
interest
rate
and
the
weighted
deposit
rate
has
been
based
on
the
new
local ‘Interest
rate
risk
in
the
banking
book’
(IRRBB)
framework.
As
a
result,
these
figures
may
not
be
strictly
comparable
with
those
from
previous
months.

Image
source:
Shutterstock

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