Citic Bank International (CBI), China Citic Bank's offshore commercial banking arm, said its settlement of yuan-denominated, cross-border transactions jumped 366 per cent to 23.55 billion yuan (HK$28.6 billion) in the first half of the year.
CBI expects demand for yuan trade settlements to continue to increase, and forecasts the total value of transactions in Hong Kong to reach 1.5 trillion yuan by the end of the year.
Hong Kong had deposits of 553.6 billion yuan by June 30, up 517 per cent from the previous year. CBI expects total yuan deposits in the city to reach 750 billion yuan by year-end.
The bank's own yuan deposits rose 129.5 per cent to 16.34 billion yuan by the end of June, about 3 per cent of the city's total yuan deposits.
Nick Huang, CBI alternate chief executive for wholesale banking, said the lender chose to invest most of its yuan deposits in high-yielding channels, such as the mainland's interbank bond market, and high-interest loans to companies.
CBI's wholesale banking division earned annualised interest rates of 3 per cent to 5 per cent on about 10 billion yuan, or 61 per cent of the bank's deposits, a high rate of return for yuan-related business, Huang said.
Yuan loans rocketed 1,350.6 per cent in the first half from the same period last year. Huang did not disclose the specific amount, but said he expected the wholesale banking division's yuan loans to surge fivefold in the third quarter from the loan level at the end of June.
CBI's Singapore branch, which had a soft launch eight months ago, broke even because of the growing yuan business, strong trade between China and the Association of Southeast Asian Nations, and business referrals from its parent bank, China Citic Bank. The Singaporean branch's trade finance business amounted to nearly US$4 billion in the first half of this year.