Local banks post 4.5pc pre-tax profit rise

Local retail banks achieved a moderate 4.5 percent growth in pre-tax profit between January and September this year, the Hong Kong Monetary Authority said yesterday.

Annualized net interest margin — which measures the difference between the interest income generated by retail banks and the amount of interest paid out to their lenders – stood at 1.32 percent during the period.

The figure stayed broadly the same as last year, Hong Kong’s de facto central bank said.

It noted though that the January to September figure marked a slight improvement from the 1.3 percent recorded between January and June this year.

HKMA attributed profit growth of local banks mainly to an expansion of their income from foreign exchange and derivatives operations and in dividends received from subsidiaries.

A decline in their operating expenses also boosted the banking industry, but a fall in fee and commission income may offset profit growth.

As retail banks’ total deposits increased at a faster pace than total loans, the loan-to-deposit ratio of retail banks declined to 55.2 percent at the end of the third quarter from 57 percent a quarter earlier.

Retail banks’ total loans increased by 1 percent during the period, with loans for use in Hong Kong rising by 1.2 percent and loans for use outside Hong Kong expanding by 0.2 percent.

The authority said lending by local banks in the mainland expanded by 3.2 percent to a combined HK$4.55 trillion at the end of the third quarter from the previous quarter.

The HKMA said the loan-to-deposit ratio of local banks declined to 55.2 percent from 57 percent and the setback is attributed to a faster increase of deposits compared to loans that were disbursed to customers.

Meanwhile, the Hong Kong interbank offered rate, or the rate of interest charged on short-term loans, continued to rise for the 11th day yesterday. One-month HIBOR yesterday edged up to 0.68 percent from 0.675 percent a day earlier, while three-month HIBOR increased from 1 percent to 1.00964 percent, according to data from the Hong Kong Association of Banks.