Hong Kong’s banking system recorded a broad increase in deposits in April, with renminbi deposits rising mainly on corporate fund flows even as cross-border trade settlement remittances declined from the previous month.
Total deposits with authorized institutions increased by 1.5% in April, according to statistics published by the Hong Kong Monetary Authority.
Among the total, Hong Kong dollar deposits and foreign currency deposits increased by 1.3% and 1.6%, respectively. In the year to end-April, total deposits and Hong Kong dollar deposits increased by 2.4% and 3.2%, respectively.
Renminbi deposits in Hong Kong increased by 4.1% in April to RMB1.08 trillion at the end of the month, mainly reflecting fund flows of corporates.
Total remittance of renminbi for cross-border trade settlement amounted to RMB1.21 trillion in April, compared with RMB1.29 trillion in March.
The figures point to steady liquidity in Hong Kong’s banking system, while the rise in renminbi deposits highlights the city’s role as a key offshore renminbi centre.
Still, the HKMA said changes in deposits are affected by a wide range of factors, including interest rate movements and fund-raising activities, making it more appropriate to observe longer-term trends rather than over-generalise fluctuations in a single month.
Total loans and advances increased by 0.5% in April and by 3.6% in the year to end-April. Among the total, loans for use in Hong Kong, including trade finance, increased by 0.1%, while loans for use outside Hong Kong rose by 1.9%.
The Hong Kong dollar loan-to-deposit ratio decreased to 71.6% at the end of April from 72.3% at the end of March, as Hong Kong dollar deposits increased at a faster pace than Hong Kong dollar loans.
Hong Kong dollar M2 and M3 both increased by 1.3% in April and by 3.1% from a year earlier. Seasonally adjusted Hong Kong dollar M1 decreased by 1.1% in April, while increasing by 14.1% from a year earlier, reflecting in part investment-related activities.
Total M2 and total M3 both increased by 1.4% in April and by 10.0% from a year earlier.
The HKMA said monthly monetary statistics are subject to volatilities due to a wide range of transient factors, including seasonal funding demand as well as business and investment-related activities, and caution is required when interpreting the statistics.