FIERCE competition among banks has given rise to negative trends in the industry, says Sir Quo-wei Lee, chairman of Hang Seng Bank. Sir Quo-wei said some banks had chosen to offer better interest rates to attract deposits and scrambled for lending deals, which were ''negative'' for the industry. Also, he said the difference between deposit rates and lending rates was likely to narrow down rather than widen, which analysts said could cut the earnings growth of banks. But Sir Quo-wei said Hang Seng Bank would maintain its established and traditional policy on the ratio of deposits and lending amid the climate of strong competition. ''We will not, in order to do more business, change our policy,'' he said after the bank's annual meeting yesterday, Bearish analysts predicted Hang Seng Bank's earnings growth would be limited due to its saturated operations in the territory. The bank saw a 2.5 per cent deposit growth and a 6.1 per cent rise in advances last year. Sir Quo-wei was unwilling to respond directly to such comments and would make no forecast about the bank's performance this year. But he was adamant that the bank would maintain its dividend payout this year and that it would seek increased contributions from non-interest income sources, such as participation and arrangement of loan syndication. Vice-chairman and chief executive Ho Tak-ching said the bank had been keenly developing its activities in foreign exchange, treasury operations and project finance. In the past few months, he said it had been actively involved in project finance, including the Shajiao C power station in Guangdong, the financing of China's purchase of four aircraft, and property development finance. Sir Quo-wei said the bank's overseas business centred mainly on China, noting that the contribution from its mainland business still accounted for a minor portion of the group's overall operations. Despite its increased exposure to China, he said there was no plan yet to upgrade its three representative offices in Shenzhen, Xiamen and Shanghai to full branch status. On the property market in Hongkong, Mr Ho said home-buyer activity had increased last month in view of the stabilised prices. He agreed that a lifting of the 70 per cent mortgage limits could help the home market, but he added that the high level of prices remained the most crucial concern for potential buyers.