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SCMP Reporter

Improvements in first three quarters helped by increase in non-interest income

Retail lenders recorded respectable profit growth in the first three quarters of this year, largely due to an increase in non-interest income and the stabilisation of the net interest margin, the Hong Kong Monetary Authority said in its quarterly bulletin published yesterday.

The net interest margin of Hong Kong banks improved in the third quarter to 1.66 per cent, slightly up from 1.64 per cent in the previous quarter.

The net interest margin stabilised in the second half of last year, partly helped by a buoyant property market which alleviated fierce competition in the mortgage market.

Raymond Or Ching-fai, vice-chairman at Hang Seng Bank, said the rise in the interbank rate   helped  improve interest margins.

'Some of the banks had increased interest rates higher [than the US interest rate] and, with their saving deposits relatively small, they could enjoy greater returns from prime lendings,' he said.

The  authority said the increase in the domestic interest rate had not yet posed significant difficulties for banks.

'But the associated risk of a slowdown in loan growth remains a concern,'  it said.

Loans for use within Hong Kong were little changed in the third quarter, while outstanding residential mortgage loans fell slightly during the quarter, reflecting a moderation in property prices and deals.

However, loans grew by 9.2 per cent compared with the corresponding year, and asset quality continued to improve amid stable conditions in the domestic economy and the property market.

The  authority also pointed out that operating costs of banks had  started to rise this year, with higher staff costs arising from salary increases, new hirings and finance business expansion. Overall cost pressures, however, did not appear to be a serious concern at this stage.

Meanwhile, the de facto central bank said it had laid down plans to further develop financial infrastructure in three areas, including payment systems, the bond market and mainland-related infrastructure.

It said it would put in place a safe and efficient multi-currency payment platform to facilitate domestic and international economic transactions and financial intermediation by providing yuan-related infrastructure and expanding the use and coverage of  cross-border links to serve mainland business.

At the same time, it said it would develop a mainland-related financial infrastructure platform in Hong Kong which would deliver financial services to channel overseas savings to investment on the mainland and channel mainland savings to investment overseas.



Local lenders record respectable profit growth