UNSURPRISINGLY, the Fed pushed up fund rates and discount rates, and the major US banks followed by raising their best lending rate.
Inevitably, Hong Kong banks will have to follow. While this is a welcome move, far-sighted bankers should have started to re-calculate their asset and liability matrix.
However, there were no sighs of relief from bankers after rates were freed from the grip of uncertainty.
Bankers, in pricing their assets and planning future lendings, will have difficulty forecasting how much rates should rise and when.
They maintain that the rate rise will not have an adverse impact on bank profitability because the profit margin will remain intact.
However, with the possible dampening of consumer finance, which is on a much higher rate than even the mortgage lending rate, the most profitable form of lending may face a squeeze.
Most notable are the no-purpose personal loans and credit card loans which bear an annualised percentage rate of more than 20 per cent.
