At Extreme Investor Network, we strive to provide you with the latest insights and updates in the world of finance and technology. Today, we are excited to share with you the recent announcement made by the Hong Kong Monetary Authority (HKMA) regarding a decrease in the composite interest rate at the end of May 2024.
The composite interest rate, serving as an essential measure of the average cost of funds for banks, fell by 4 basis points to 2.61% from 2.65% at the end of April 2024, as reported by the HKMA. This reduction was primarily attributed to a decrease in the weighted funding cost for deposits during the month.
For those interested in historical data and trends, the HKMA has made available historical data on the composite interest rate from the end of the fourth quarter of 2003 to the end of May 2024 in its Monthly Statistical Bulletin. This data can provide valuable context for analyzing long-term trends in the cost of funding for banks in Hong Kong.
Understanding the composite interest rate is crucial for investors and financial analysts. It is a weighted average interest rate of all Hong Kong dollar interest-rate-sensitive liabilities, encompassing deposits from customers, amounts due to banks, negotiable certificates of deposit, and other debt instruments. However, it’s important to note that the composite interest rate only reflects average interest expenses and does not factor in other costs related to making loans.
Since June 2019, changes have been made in the calculation methodology for the composite interest rate and the weighted deposit rate, aligning with the new local “Interest Rate Risk in the Banking Book” (IRRBB) framework. As a result, the figures may not be directly comparable with previous months.
For more detailed information and to stay updated on the latest developments, we encourage you to visit the official announcement on the HKMA website. Stay tuned for more exclusive insights and analyses on cryptocurrencies, blockchain technology, and financial markets from Extreme Investor Network.
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