BOTH Hong Kong dollar deposits and loan growth had a better year last year than in 1992, with significant loan growth mainly concentrated in the construction and financial sectors, according to the just-released monetary statistics for December 1993. The quarterly figure for net Hong Kong dollar liabilities to banks in China showed a 32.1 per cent drop from HK$44.2 billion at the end of September to $30 billion by year-end, believed to be triggered by the recent monetary reforms in China. Although plagued by the low interest environment, total deposit growth edged up from 9.4 per cent in 1992 to 14.6 per cent in 1993. Hong Kong dollar deposits moved in line with the growing trend, showing a surge from 13.2 per cent growth in 1992 to 25.5 per cent in 1993. Economists attributed the improved deposit figures to the heightened competition among banks to attract Hong Kong dollar time deposits. ''The buoyant stock market has inevitably led to rapid credit creation, which has resulted in higher deposit growth,'' said Steven Chan Sik-tin, economist at Bank of East Asia. The declining interest rates for most European currencies, coupled with fluctuations in exchange rates, had prompted many to convert their foreign currency deposits to Hong Kong dollars, he said. Supported by higher deposit growth, loans in Hong Kong dollars jumped from a 10.1 per cent rise in 1992 to 17.9 per cent in 1993. Subsequently, the gap between loan and deposit growth was narrowed. The loan-to-deposit ratio stood at 111.5 per cent by the end of last year, compared with 118.7 per cent in 1992. The sectoral breakdown of loans for use in Hong Kong revealed that loans for building, construction and property development and investment had the highest increase, growing at 27.9 per cent in 1993 against 13.1 per cent in 1992. On the mortgage lending side, the tightening measures adopted by major lenders arrested loan growth for buying residential property, other than flats in the Home Ownership Scheme. ''The growth was modest, only 15.1 per cent as against the 13.6 per cent growth in 1992. The intensity in growth we saw in the first half of the year was partially dissipated by mortgage banks' lending restrictions in the third quarter,'' said Jim Wong, economic adviser at Hongkong Bank. The continued contraction of the territory's manufacturing sector was reflected in the 15.7 per cent loan growth for the sector, a decrease from 16.9 per cent growth in 1992. Apart from deposit and loan figures, the flow of Hong Kong dollars across the border has been a subject of interest since China initiated austerity measures last year. Hong Kong dollar external claims on and liabilities to banks in China amounted to $37.1 billion and $67.1 billion, respectively. ''This is indicative of a slowdown in the recycling of Hong Kong dollar funds due to the credit tightening in China,'' an economist said. Others said Joseph Yam Chi-kwong, chief executive of the Hong Kong Monetary Authority, had explained the fall a few days ago. Mr Yam guessed that mainland banks, which had heard of the merging of the two yuan exchange rates ahead of the official announcement in December, might have sold Hong Kong dollars to other non-Chinese banks a month earlier.
