Hong Kong Monetary Trends: Deposits Grow, Loans Shrink in August

The Hong Kong Monetary Authority (HKMA) has revealed in its recent publication on 29 September that there has been a slight increment in total deposits with authorized institutions by 0.6% in August 2023.

The deposits consisted of Hong Kong dollar deposits, which saw an increase of 0.4%, and foreign currency deposits, which experienced a rise of 0.8%. Total deposits and Hong Kong dollar deposits grew by 2.0% and 1.9% respectively in the year to end-August.

Renminbi deposits in Hong Kong notably rose by 6.0% in August, ending the month at RMB962.5 billion, primarily driven by corporate fund flows. Furthermore, the total remittance of renminbi for cross-border trade settlement climbed to RMB1,121.2 billion in August, up from RMB1,022.1 billion in July.

However, there was a decrease in total loans and advances by 0.3% in August and a 1.7% drop in the year to end-August. This included a decrease of 0.2% in loans for use in Hong Kong and a 0.5% drop in loans for use outside Hong Kong in August.

Additionally, the Hong Kong dollar loan-to-deposit ratio was lowered to 87.1% at the end of August, a reduction from 87.8% at the end of July, attributed to the increase in Hong Kong dollar deposits and a simultaneous decrease in Hong Kong dollar loans.

Hong Kong dollar M2 and M3 both recorded a 0.3% rise in August and a 1.4% increase compared to a year ago, whereas the seasonally-adjusted Hong Kong dollar M1 saw a decrease of 0.4% in August and a significant drop of 18.5% compared to the previous year, partially due to investment-related activities.

The HKMA emphasized caution while interpreting these monthly monetary statistics, as they are susceptible to volatilities influenced by various transient factors, including seasonal and IPO-related funding demand and other business and investment-related activities.

These revelations underscore the necessity for a comprehensive understanding and cautious interpretation of the nuanced financial landscape, given the numerous dynamic elements impacting changes in deposits, loans, and other financial activities.

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