briefing to the legislative council panel on financial affairs · 2012. 11. 12. · hong kong...
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HONG KONG MONETARY AUTHORITYHONG KONG MONETARY AUTHORITY
Briefing to the Legislative CouncilBriefing to the Legislative Council
Panel on Financial AffairsPanel on Financial Affairs
19 November 201219 November 2012
• CB(1)159/12-13(01)
2
Updates on
– Financial and Economic Environment
– Currency Stability
– Banking Stability
– Financial Infrastructure
– Hong Kong as an International Financial Centre
– Investment Environment and Performance of The Exchange Fund
– Hong Kong Mortgage Corporation
DISCUSSION TOPICSDISCUSSION TOPICS
3
FINANCIAL AND ECONOMIC FINANCIAL AND ECONOMIC ENVIRONMENTENVIRONMENT
4
GLOBAL ECONOMIC GROWTH FORECASTSGLOBAL ECONOMIC GROWTH FORECASTS
Source: Consensus Forecasts
(% year-on-year) Real GDP Growth
6.6 6.16.76.77.2Asia (ex-Japan)
8.17.78.48.49.3Mainland China
3.61.63.03.04.9Hong Kong
1.3 2.32.01.8-0.8Japan
0.2 -0.5-0.4-0.31.4Euro area
2.0 2.12.32.21.8US
Nov 2012 FAP briefing
May 2012 FAP briefing
Mar 2012 FAP briefing
2013 Forecasts
2012 Forecasts
2011
5
REAL GDP GROWTH IN MAJOR COUNTRIESREAL GDP GROWTH IN MAJOR COUNTRIES
Source: Bloomberg
-24
-20
-16
-12
-8
-4
0
4
8
12
2006 2007 2008 2009 2010 2011 2012
% qoq, annualised
-24
-20
-16
-12
-8
-4
0
4
8
12% qoq, annualised
US Euro area Japan
6
US AND EURO AREA US AND EURO AREA REAL GDP GROWTHREAL GDP GROWTH
Sources: CEIC and HKMA staff calculations
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
1996 1998 2000 2002 2004 2006 2008 2010 2012
% yoy US and Euro area real GDP weighted index
average=3.7%
average=2.6%
2012 Q2=1.0%
7
PURCHASING MANAGERSPURCHASING MANAGERS’’ INDEX IN MAJOR INDEX IN MAJOR COUNTRIESCOUNTRIES
Source: Bloomberg
15
20
25
30
35
40
45
50
55
60
65
2006 2007 2008 2009 2010 2011 2012
15
20
25
30
35
40
45
50
55
60
65
US non-manufacturing ISM
Euro area PMI composite
Japan PMI
Index Index
8
RETAIL SALES IN MAJOR COUNTRIESRETAIL SALES IN MAJOR COUNTRIES
Source: CEIC
-10
-8
-6
-4
-2
0
2
4
6
2006 2007 2008 2009 2010 2011 2012
% 3m-on-3m
-10
-8
-6
-4
-2
0
2
4
6% 3m-on-3mUS Japan Euro area
9
ASIA: REAL GDP GROWTHASIA: REAL GDP GROWTH
Note: NIE4 includes Hong Kong, Singapore, South Korea and Taiwan; ASEAN4 includes Indonesia, Malaysia, the Philippines and Thailand
Sources: CEIC, IMF and HKMA staff estimates
-8
-4
0
4
8
12
16
2007 2008 2009 2010 2011 2012
-8
-4
0
4
8
12
16China
NIE4
ASEAN4
% year-on-year% year-on-year
10
EUROPE: SOVEREIGN BOND YIELDSEUROPE: SOVEREIGN BOND YIELDS
Sources: Bloomberg and EcowinNote: Ecowin has stopped publishing Ireland’s 10-year bond yield since 22 Nov, 2011
10-year sovereign bond yield
0
5
10
15
20
25
30
35
40
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Portugal
Greece
%
Ireland
1
2
3
4
5
6
7
8
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Spain
Italy%
France
Germany
11
EUROPE: REAL GDP IN PERIPHERAL COUNTRIESEUROPE: REAL GDP IN PERIPHERAL COUNTRIES
Sources: Data Stream, Consensus Forecasts and HKMA staff calculations
75
80
85
90
95
100
105
2007 2008 2009 2010 2011 2012 2013
Spain
Greece
Ireland
Italy
Portugal
Index (2007 Q2=100)
Forecast
12
EUROPE: CONSUMER PRICE INDEXEUROPE: CONSUMER PRICE INDEX
Sources: Data Stream, Consensus Forecasts and HKMA staff calculations
100
110
120
130
140
150
160
2000 2002 2004 2006 2008 2010 2012
(Index, Jan 1999=100, 12MMVA)
Germany
Greece
Spain
Euro debt crisis
13
US: US: CONSUMPTION GROWTH & CONSUMPTION GROWTH & BUSINESS ACTIVITYBUSINESS ACTIVITY
Source: CEIC
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2008 2009 2010 2011 2012
25
30
35
40
45
50
55
60
65
Personal consumptionexpenditure (LHS)
ISM manufacturing index(RHS)
% 3m-on-3m Index
14
USUS:: CONSUMPTION AND INCOME GROWTH CONSUMPTION AND INCOME GROWTH
Source: CEIC
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2009 2010 2011 2012
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0Real personal consumption expenditure
Real disposable income
% 3m-on-3m % 3m-on-3m
15
US: US: LABOUR MARKET SITUATIONLABOUR MARKET SITUATION
Source: CEIC
57
59
61
63
65
2000 2002 2004 2006 2008 2010 2012
2
3
4
5
6
7
8
9
10
11
12
Employment-to-population ratio (LHS)
Unemployment rate (Inverted, RHS)
% %
16
US: US: LABOUR FORCE PARTICIPATIONLABOUR FORCE PARTICIPATION
Source: CEIC
63
64
65
66
67
68
2000 2002 2004 2006 2008 2010 2012
Labour force participation rate
%
17
US: US: HOUSE PRICESHOUSE PRICES
Sources: Standard & Poor’s and CEIC
100
120
140
160
180
200
220
2000 2002 2004 2006 2008 2010 2012
FHFA home price index
Case-Shiller 20-city home price index
Index (Jan 2000=100)
18
US: US: HOME SALESHOME SALES
Source: CEIC
0
1
2
3
4
5
6
7
8
2000 2002 2004 2006 2008 2010 2012
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Existing home sales (LHS)
New home sales (RHS)
Millions, annualised Millions, annualised
19
USUS:: FISCAL CONSOLIDATIONFISCAL CONSOLIDATION
Sources: CBO and HKMA staff calculations
Change in fiscal deficit
-3
-2
-1
0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013 2014 2015
% GDP
Actual
With fiscal cliff
Without fiscal cliffFiscal
expansion
Fiscalcontraction
-2.8%
-1.0%-1.6%
-0.3%-0.7% -0.7%
-1.3%
+6.7%
+2.1%
-0.8%
+0.0%
20
MAINLAND CHINA: REAL GDP GROWTHMAINLAND CHINA: REAL GDP GROWTH
Source: CEIC
-4
0
4
8
12
16
20
2005 2006 2007 2008 2009 2010 2011 2012
-4
0
4
8
12
16
20Net exports (lhs)Investment (lhs)Consumption (lhs)Real GDP growth (rhs)
(First 3 quarters)
ppt %
21
MAINLAND CHINA: RETAIL SALESMAINLAND CHINA: RETAIL SALES
Sources: CEIC, WIND and HKMA staff estimates
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011 2012
0
5
10
15
20
25
Nominal retail sales
Real retail sales
% yoy% yoy
22
MAINLAND CHINA: FIXED ASSET INVESTMENTMAINLAND CHINA: FIXED ASSET INVESTMENT
Sources: CEIC and HKMA staff estimates
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010 2011 2012
0
5
10
15
20
25
30
35
40Fixed Asset Investment% yoy % yoy
23
MAINLAND CHINA: EXPORT GROWTHMAINLAND CHINA: EXPORT GROWTH
Sources: CEIC and HKMA staff estimates
-30
-20
-10
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012-30
-20
-10
0
10
20
30
40
50
60Exports
% yoy % yoy
24
MAINLAND CHINA: PURCHASING MANAGERSMAINLAND CHINA: PURCHASING MANAGERS’’ INDEXINDEX
Source: CEIC
35
40
45
50
55
60
65
70
2008 2009 2010 2011 2012
35
40
45
50
55
60
65
70Manufacturing PMI (Official)
Non-manufacturing PMI (Official)
IndexIndex
25
MAINLAND CHINA: INFLATIONMAINLAND CHINA: INFLATION
Source: CEIC
-10
-8
-6-4
-2
0
2
46
8
10
12
2004 2005 2006 2007 2008 2009 2010 2011 2012
% yoy
-10
-8
-6-4
-2
0
2
46
8
10
12
% yoy
Consumer price index inflation
Producer price index inflation
26
MAINLAND CHINA: MONEY AND LOAN GROWTHMAINLAND CHINA: MONEY AND LOAN GROWTH
Sources: CEIC and HKMA staff estimates
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010 2011 2012
0
5
10
15
20
25
30
35
40M2
Bank loans
% yoy% yoy
27
MAINLAND CHINA: PROPERTY TRANSACTION MAINLAND CHINA: PROPERTY TRANSACTION VOLUME IN MAJOR CITIESVOLUME IN MAJOR CITIES
Source: WIND
0
20
40
60
80
100
Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun
Units ('000)
0
20
40
60
80
100
Beijing
Shenzhen
Shanghai
Tianjin
2007
Units ('000)
Tightening policies launchedin 2010
Re-enforced tightening policies,especially the purchase limits in 2011
(Jan)
(Jan)
(Apr) (Sep)
20112008 2009 2010 2012
28
MAINLAND CHINA: HOUSING PRICE CHANGES IN MAINLAND CHINA: HOUSING PRICE CHANGES IN MAJOR CITIESMAJOR CITIES
Sources: CEIC, WIND and HKMA staff estimates
-0.2
0.0
0.2
0.4
0.6
Beijing Tianjin Shanghai Shenzhen
-0.2
0.0
0.2
0.4
0.6
Jul 2012 Aug 2012 Sep 2012
% mom % mom
29
Changes in Real GDP and contributions by major components
HONG KONG: REAL GDP GROWTHHONG KONG: REAL GDP GROWTH
Sources: C&SD and HKMA staff estimates
-12
-8
-4
0
4
8
12
16
-12
-8
-4
0
4
8
12
16
Net exports (lhs)
Fixed investment andinventory (lhs)
Governmentconsumption (lhs)
Private consumption(lhs)
Real GDP (rhs)
| 2008 | 2009 | 2010 | 2011
% points % yoy
| 2012 Q2
30
HONG KONG: ECONOMIC ACTIVITYHONG KONG: ECONOMIC ACTIVITY
Retail Sales and Exports
Source: C&SD
-20
-15
-10
-5
0
5
10
15
20
-20
-15
-10
-5
0
5
10
15
20Retail sales volume
Export volume
%
| 2008 | 2009 | 2010 | 2011
% change (3-month-on-3-month)
| 2012 (Sep)
31
HONG KONG: BUSINESS OUTLOOKHONG KONG: BUSINESS OUTLOOK
Sources: C&SD and Markit Economics
-60
-40
-20
0
20
40
20
30
40
50
60
70Quarterly Business Tendency Survey (lhs)
PMI (rhs)
| 2008 | 2009 | 2010 | 2011(Q1-Q4)
contraction
expansion
Net balance Index
| 2012
32
Unemployment rate
HONG KONG: LABOUR MARKETHONG KONG: LABOUR MARKET
Source: C&SD
0
2
4
6
8
10
2001 2003 2005 2007 2009 2011
0
2
4
6
8
10% of labour force %
2012 (Sep)
33
Underlying inflation and contributions of its components
Underlying inflation: Netting out the effects of all Government's one-off relief measures from headline inflation
Sources: C&SD and HKMA staff estimates
HONG KONG: INFLATIONHONG KONG: INFLATION
-2-1012345678
-2-1012345678Others
Housing rentalsBasic foodUnderlying inflation
% year-on-year % year-on-year
| 2008 | 2009 | 2010 | 2011 | 2012(Sep)
34Source: Consensus Forecasts (Nov 2011, Feb, May, Aug and Oct 2012)
HONG KONG: INFLATION FORECASTSHONG KONG: INFLATION FORECASTS
0
1
2
3
4
5
6
2012 2013
Nov-11Feb-12May-12Aug-12Oct-12
%Survey round
35
HONG KONG: EQUITY MARKETHONG KONG: EQUITY MARKET
Hong Kong and Asia Pacific equity market performance
Source: Bloomberg
0
50
100
150
200
250
300
Jul Jan Jul Jan Jul Jan Jul Jan Jul
0
50
100
150
200
250
300
2008 2009 2010
Hong Kong'sHang Seng Index
MSCI AC Pacific(excl. HK & Japan)
Oct 27, 2008 = 100
2011 2012
36
HONG KONG: RESIDENTIAL PROPERTY PRICES HONG KONG: RESIDENTIAL PROPERTY PRICES AND TRANSACTION VOLUMEAND TRANSACTION VOLUME
Source: Rating and Valuation Department
0
20
40
60
80
100
120
140
1996 1998 2000 2002 2004 2006 2008 2010 2012
0
5
10
15
20
25
30
35
40Prices of large flats (lhs)
Prices of small and medium-sized flat (lhs)
Total transaction volume (rhs)
ThousandsOct 1997 = 100
(Oct)
37
HONG KONG: OUTSTANDING MORTGAGE LOANSHONG KONG: OUTSTANDING MORTGAGE LOANS
Changes in outstanding mortgage loans
* There is a break in data series at December 2000 due to an increase in the number of surveyed institutionsSource: HKMA
-20
0
20
40
60
80
100
120
1996 1998 2000 2002 2004 2006 2008 2010 2012
-20
0
20
40
60
80
100
120yoy change (HK$ billion)
(Sep)
38
HONG KONG: NEW MORTGAGE LOANSHONG KONG: NEW MORTGAGE LOANS
New mortgage loans made and approved
* There is a break in data series at December 2000 due to an increase in the number of surveyed institutionsSource: HKMA
0
5
10
15
20
25
30
35
40
45
50
1996 1998 2000 2002 2004 2006 2008 2010 20120
5
10
15
20
25
30
35
40
45
50New mortgage loans approved
New mortgage loans made
HK$ billion HK$ billion
(Sep)
39
CURRENCY STABILITYCURRENCY STABILITY
40
HONG KONG DOLLAR SPOT EXCHANGE RATEHONG KONG DOLLAR SPOT EXCHANGE RATE
7.70
7.75
7.80
7.85
7.90
7.95
HKD/USD
7.70
7.75
7.80
7.85
7.90
7.95
2008 2009 2010 2011 2012
HKD/USD
Convertibility Zone
Spot exchange rateappreciation of HKD
• The Hong Kong dollar spot exchange rate has traded with a firm bias since June, alongside higher regional currencies and equities, as risk appetite improved on a less strained European market, the launch of QE3 by the US Fed, and signs of a bottoming out of Mainland China’s economic growth.
• It strengthened to 7.75 a number of times since late October, triggering the strong-side Convertibility Undertaking and prompting the HKMA to purchase US dollars for HK dollars to maintain exchange rate stability. The last time the Strong-side CU was triggered was in December 2009.
41
AGGREGATE BALANCEAGGREGATE BALANCE
0
30
60
90
120
150
180
210
240
270
300
330
360
2008 2009 2010 2011 2012
HKD billion
0
30
60
90
120
150
180
210
240
270
300
330
360HKD billion
• Liquidity remained abundant in the interbank market.
• With the triggerings of the strong-side CU since late October, the
HKMA injected a total of HK$32.2 billion into the banking system. The
Aggregate Balance, having been steady for about 2.5 years, rose to
HK$180.9 billion on November 6.
42
CAPITAL INFLOWS AND ASSOCIATE RISKSCAPITAL INFLOWS AND ASSOCIATE RISKS
• Under the currency board system, the HKMA undertakes to purchaseUSD and sell HKD at 7.75. So, when the strong-side Convertibility Undertaking is triggered, the HKMA will passively purchase USD and sell HKD. There is no limit on the size of such operations
• The latest net inflows were likely driven by an improvement in market sentiment in light of better-than-expected economic readings of Mainland China and the launch of QE3 by the US Fed
• It is difficult to predict the future direction of fund flows. Any sudden shift in market sentiment amid lingering uncertainties on the eurozonesovereign debt problem and US fiscal cliff may trigger a reversal of fund flows, leading to greater volatility in the exchange rate and interest rates
• Public should be aware of such risks and avoid over-sketching themselves financially
43
DOMESTIC INTEREST RATESDOMESTIC INTEREST RATES
0.0
0.2
0.4
0.6
0.8
2009 2010 2011 2012
% pa
0.0
0.2
0.4
0.6
0.8% pa
Overnight USD LIBOR
Overnight HKD HIBOR
0.0
0.3
0.6
0.9
1.2
1.5
2009 2010 2011 2012
% pa
0.0
0.3
0.6
0.9
1.2
1.5% pa
3-month USD LIBOR
3-month HKD HIBOR
• Short-term Hong Kong dollar interest rates have remained largely stable while US dollar interest rates have declined. The spread between 3-month HIBOR and LIBOR has turned into positive territory since mid-September.
44
HONG KONG DOLLAR FORWARD EXCHANGE RATEHONG KONG DOLLAR FORWARD EXCHANGE RATE
7.65
7.70
7.75
7.80
7.85
2008 2009 2010 2011 2012
HKD / USD
7.65
7.70
7.75
7.80
7.85
HKD / USD
Spot
12-month forward
• In line with the narrowing of interest rates between Hong Kong dollar and US dollar, the 12-month Hong Kong dollar forward discounts nearly dissipated.
45
BANKING STABILITYBANKING STABILITY
46
Locally incorporated AIs continued to be well capitalised
15.9%
6
8
10
12
14
16
18
Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
%
BANKING SECTOR PERFORMANCEBANKING SECTOR PERFORMANCE
• The consolidated capital adequacy ratio of locally incorporated AIs remained unchanged at 15.9% at end-June 2012, and was well above the international standard of 8%.
47
Liquidity ratio of retail banks remained well above statutory minimum of 25%
40.9%
20
25
30
35
40
45
50
Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12
%
BANKING SECTOR PERFORMANCEBANKING SECTOR PERFORMANCE
48
Asset quality remained good compared with historical standards
0
20
40
60
80
100
Classified loan ratioLatest: 0.52% (Jun 2012)Peak: 10.61% (Sep 1999)
Ratio of overdue andrescheduled loans
Latest: 0.45% (Jun 2012)Peak: 8.58% (Sep 1999)
Credit card charge off ratioLatest: 1.81% (Q2 2012)Peak: 14.55% (Q3 2002)
Number of RMLs in negative equity
Latest: 0 (Sep 2012)Peak: 105,697 (Jun 2003)
Residential Mortgage Loans("RMLs") delinquency ratio
Latest: 0.01% (Sep 2012)Peak: 1.43% (Apr 2001)
Peak Latest
BANKING SECTOR PERFORMANCEBANKING SECTOR PERFORMANCE
• The HKMA will continue to monitor closely the asset quality of retail banks’loan portfolios.
49
Net interest margin of retail banks remained stable
BANKING SECTOR PERFORMANCEBANKING SECTOR PERFORMANCE
1.40%
1.0
1.1
1.2
1.3
1.4
1.5
Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12
%
• The quarterly annualised net interest margin of retail banks increased to 1.40% in Q2/2012 and remained stable in Q3/2012.
• The aggregate pre-tax operating profit of retail banks’ Hong Kong offices in Q1/2012 - Q3/2012 increased by 13.9% compared with the same period last year. Benign increases in net interest income (+16%) contributed to most of the profit growth.
50
CREDIT GROWTHCREDIT GROWTH
17.6%
4.0%
9.1% 9.4%
7.5%
0%
5%
10%
15%
20%
Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
0%
5%
10%
15%
20%
Credit growth (%)(annualised quarter-on-quarter)
Credit growth (%)(annualised quarter-on-quarter)
Credit growth remained at a moderate level in the first three quarters of 2012
• In the first three-quarters of 2012, credit growth was at an annualised rate of 8.8%. It is much slower than the 20.2% growth recorded in 2011.
51
Loan-to-deposit ratios of banks in Hong Kong have improved in recent months
CREDIT GROWTHCREDIT GROWTH
81%
84%83%
84%87%
68%67% 68%
69%69%
50%
60%
70%
80%
90%
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
50%
60%
70%
80%
90%
Loan-to-deposit (%) Loan-to-deposit (%)
Hong Kong dollars
All currencies
2011 2012
• Hong Kong dollar loan-to-deposit ratio decreased to 81% at end-September 2012 from 84% at end-Jun 2012.
• The HKMA will continue to monitor the movement of the loan-to-deposit ratio.
52
• With the introduction of the third round of quantitative easing by the US Federal Reserve, more capital could flow into emerging markets
• Risk of property price bubble in Hong Kong increases
• The HKMA introduced on 14 September 2012 the fifth round of countercyclical macroprudential measures. These include:
tightening the maximum loan-to-value ratio and debt servicing ratio for mortgage loan applicants with multiple properties under mortgage
limiting the maximum loan tenor for all new property mortgages to 30 years
RISK MANAGEMENT IN RISK MANAGEMENT IN PROPERTY MORTGAGE LENDINGPROPERTY MORTGAGE LENDING
Based on the experience in Hong Kong, borrowers with multiple mortgages have higher level of indebtedness and leverage, and have higher chance of default than those with only one property under mortgage during property market and economic downturns.
Prolonged loan tenor not only will increase credit risk of banks, but will also weaken the ability of borrowers to withstand interest rate risk.
New measures applicable to applicants with one or more properties under mortgage
Debt servicing ratio (DSR) based lendingMaximum DSR : lowered to 40% from 50%Maximum stressed DSR : lowered to 50% from 60%
Exemption arrangement : An applicant with just one property with outstanding mortgage loans and the new mortgage loan is for: (i) self-occupied purpose;(ii) replacement of an existing property; or (iii) cash-out refinancing secured by the existing mortgaged property
Net worth based lendingMaximum LTV ratio : lowered to 30% from 40%
Borrowers whose principal income is derived from outside HKMaximum LTV ratio : 20 percentage points below the applicable LTV ratio
The HKMA will continue to monitor closely the market developments and introduce appropriate measures in response to changes in the property market cycle to safeguard banking stability.
25.4 years22 yearsAverage tenor of new mortgage loans
Sep 2012Sep 2009(i.e. before the 1st round of macroprudential countercyclical measures was introduced)
53
Banks did not report any RMLs in negative equity in Q3/2012
0
20,000
40,000
60,000
80,000
100,000
120,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Peak level in Q2 2003: 105,697
Q3 2012: 0
No. of
RESIDENTIAL MORTGAGE LOANS (RESIDENTIAL MORTGAGE LOANS (““RMLsRMLs””) ) IN NEGATIVE EQUITYIN NEGATIVE EQUITY
Statistics on RMLs in negative equity
( ) as percentage of total outstanding RMLs
* Less than 0.01% as percentage of total outstanding RMLs
6/2003 9/2011 12/2011 3/2012 6/2012 9/2012105,697 1,653 1,465 78 5 0(22%) (0.3%) (0.3%) (0.02%) *
Total outstanding value of RMLs in negative equity (HK$Mn)
164,577(31%)
4,148(0.5%)
3,647(0.5%)
236(0.03%)
16*
0
Value of unsecured portion 35,828 165 122 4 0.3 0(HK$Mn) (6.75%) (0.02%) (0.02%) * *
Proportion of RMLs in negative equity with delinquencies of more than three months
2.3% 0% 0% 0% 0% 0%
Total outstanding number of RMLs in negative equity
54
INVESTOR AND CONSUMER PROTECTIONINVESTOR AND CONSUMER PROTECTION
• Developing an enhanced competency framework for the private wealth management practitioners
• Working closely with relevant regulators on implementation of the statutory regime for the regulation of MPF intermediaries
• Providing assistance to enable the smooth operation of Financial Dispute Resolution Centre and the establishment of Investor Education Centre
• With a view to raising the competency and ethical standards of industry practitioners and to developing and maintaining a pool of professional talents for the private wealth management (PWM) industry in Hong Kong, the HKMA and the Securities and Futures Commission (SFC) are working with the industry and professional bodies to develop an enhanced competency framework covering the requisite level of competency and on-going professional development of PWM practitioners.
• The statutory regime for MPF intermediaries and the Employee Choice Arrangement have both come into effect on 1 November 2012. The HKMA cooperates with the Mandatory Provident Fund Schemes Authority and the other financial regulators on implementation matters. The HKMA issued a circular on 18 September 2012 reminding authorized institutions to comply with the applicable regulatory requirements.
• The Financial Dispute Resolution Centre Limited (FDRC) commenced operation on 19 June 2012.
• The HKMA has been working closely with the SFC on setting up the Investor Education Centre (IEC). A board of directors, including representatives from the HKMA among other financial regulators, the financial sector and the Education Bureau, will be set up to decide the scope and strategy of the work of the IEC. The IEC is expected to start operation in Q4 2012.
55
DEPOSIT PROTECTIONDEPOSIT PROTECTION
Undertaking a self-assessment of the Deposit Protection Scheme (DPS) against the Core Principles for Effective Deposit Insurance Systems to evaluate the standard of compliance with the Core Principles and identify areas that may require further enhancements to improve the effectiveness of the DPS
A publicity campaign launched in August 2012 was well received by the public
A full-scope rehearsal conducted in mid-September 2012 to test the capability of the Hong Kong Deposit Protection Board and payout agents. Result was satisfactory
56
Basel III Implementation ProgressBasel III Implementation Progress
First phase of implementation:
• Capital standards
– Rules tabled at LegCo for negative vetting
– Consultation conducted on revisions to the Pillar 2 “Supervisory Review Process”
• Disclosure standards
– Industry consultation on draft rules
First phase of implementation
• Pillar 1 - Rules implementing the first phase of the Basel III capital standards
were tabled at LegCo on 24 October for negative vetting. Subject to
completing negative vetting, the rules will take effect from 1 Jan 2013 in line
with the Basel Committee’s timetable.
• Pillar 2 – The banking industry were consulted in October on a revised
module within the HKMA’s Supervisory Policy Manual dealing with the
“Supervisory Review Process”, which sets out the manner in which Pillar 2
capital requirements should be determined and operate under Basel III.
• Pillar 3 – The industry is being consulted on the proposed Rules for
implementing new disclosure standards reflecting the changes to the Capital
Rules. These should take effect at the end of June 2013 under the Basel
timeline.
Other tasks
• The banking reporting returns are currently being updated to reflect the
changes made to the Capital Rules.
• The HKMA will continue to engage with the industry in the ongoing
implementation process for other areas of Basel III such as the liquidity
standards, leverage ratio and capital buffers.
57
FINANCIAL INFRASTRUCTUREFINANCIAL INFRASTRUCTURE
58
REFORMING OTC DERIVATIVES MARKETREFORMING OTC DERIVATIVES MARKET
G20 Commitments All standardised OTC derivative contracts should be traded on
exchanges/electronic trading platforms and cleared through central counterparties
OTC derivative contracts should be reported to trade repositories
Implementation Regulation:
– Aim to introduce the Securities and Futures (Amendment) Bill into the Legislative Council in early 2013 to implement the clearing and reporting requirements. The target is to implement the new regulations around Q3 2013
Central Counterparty: – HKEx is building a local central counterparty for OTC derivatives, which
is expected to commence operation in early 2013
Trade Repository:– The HKMA is expanding the functions of the Central Moneymarkets Unit
to develop a local trade repository, which is expected to launch in 2013 to support mandatory reporting when implemented
• Following the public consultation on the proposed regulatory regime for the
OTC derivatives market in October 2011, the HKMA and SFC published
the consultation conclusions to respond to the comments received from
the consultation and issued a supplemental consultation paper on the
proposed scope of new/expanded regulated activities and the oversight of
systemically important players in July 2012. The supplemental consultation
was closed on 31 August 2012. The HKMA and SFC are studying the
feedbacks received from the supplemental consultation.
• The detailed requirements of the new regulatory regime will be set out in
the subsidiary legislation in the form of rules. The HKMA and SFC aim to
conduct a public consultation on the draft subsidiary legislation in early
2013.
• The local trade repository will be launched in two stages – the first in Q1
2013 to support any local central counterparty that may be established by
then, and then in Q3 2013 to support mandatory reporting when
implemented.
59
GOVERNMENT BOND PROGRAMMEGOVERNMENT BOND PROGRAMME
Institutional Bond Issuance Programme:
• Nine issues totalling HK$44 billion outstanding as at end October
• Tenors from 2 years up to 10 years have been offered in order to build a benchmark yield curve
• The tenders attracted a diverse group of end-investors, such as investment funds, insurance companies and pension funds
Retail Bond Issuance Programme:
• The second batch of HK$10 billion inflation-linked bond (iBond) was successfully issued in June
• Over 330,000 valid applications were received, applying for around HK$50 billion principal amount of bonds
• Both the total number of applications and the total application amount have achieved new records in the local retail bond market
• The primary objective of the GBP is to promote the further and sustainable development of Hong Kong’s bond market through systematic issuance of government bonds. It can also help promote financial stability by making our debt market an effective channel of financial intermediation, complementing the equity markets, and the banking sector.
• The GBP is a long-term programme comprising an Institutional Bond Issuance Programme and a Retail Bond Issuance Programme.
• By enlarging the investor base over time, the GBP is expected to improve liquidity and attract more issuers to raise funds via the bond market. This will help increase the breadth and depth of our bond market, thereby consolidating our role as an international financial centre.
• The objective of the Retail Programme is to enhance the interest and awareness of local individual investors in bond investments.
• The Financial Secretary announced a second inflation-linked bond (the “iBond”) issuance to further promote the sustainable development of retail bond market in his 2012-13 Budget Speech. The issuance was completed in June 2012. A total of 332,467 valid applications were received for a total of HK$49,836,180,000 in principal amount of bonds, setting new records in the local retail bond market. The second iBond issuance has further enhanced the investing public's awareness of and interest in bonds and hence promoted the development of a retail bond market in Hong Kong.
60
Working closely with other Government agencies and the private sector to explore ways to strengthen the competitiveness of HongKong’s asset management industry and reinforce Hong Kong’s position as a leading asset management centre
Stepping up marketing efforts to proactively reach out to overseas and Mainland asset managers and investors to promote Hong Kong’s financial platform. Promotional campaigns so far covered major cities in the US, Canada, Europe, Middle East, SoutheastAsia and Mainland China
Building on the feedback from our regular dialogues with industry players, we continue to improve our platform and keep pace with the latest developments in the asset management industry
PROMOTING ASSETPROMOTING ASSETMANAGEMENT BUSINESSMANAGEMENT BUSINESS
• With the promising growth prospects of the Asian region, there has been
increasing interest for overseas asset managers to expand into Asia. To
capitalise on this trend and attract more asset managers into Hong Kong, the
HKMA is working in conjunction with other Government agencies and market
players to promote Hong Kong’s asset management business, thereby
reinforcing Hong Kong’s role as a premier international financial centre.
• To this end, the HKMA is taking part in a joint Government campaign, along
with the Financial Services and the Treasury Bureau and the Securities and
Futures Commission, in holding a series of promotional roadshows in leading
global financial centres. Since November 2010, the campaign has visited
London, New York, Zurich, Geneva, Lugano and Luxembourg, during which the
HKMA also took the opportunities to meet with key asset managers based in
their financial centres to promote the financial platform in Hong Kong and listen
to their business plans in Asia and their views on potential hurdles for their
operations in Hong Kong.
• At the same time, the HKMA has also been reaching out to the market players in major cities in the US, Canada, Europe, Middle East, Southeast Asia and Mainland China to explain the opportunities and advantages presented by Hong Kong as an asset management centre and to highlight Hong Kong's latest positive developments to overseas business decision makers.
61
DEVELOPMENT OF ISLAMIC FINANCEDEVELOPMENT OF ISLAMIC FINANCE
• Supporting the Government in drawing up legislative proposals to amend Hong Kong’s tax laws to provide a comparable tax regime for Islamic bonds vis-à-vis conventional bonds, including
Considering the feedback received during the two-month market consultation on the legislative proposals ended on 28 May 2012
Assisting in preparation of the consultation conclusions which were issued on 29 October 2012
During the consultation period, a total of 15 submissions were received
from a diverse group of stakeholders. A large majority of respondents
welcomed the legislative objectives and proposals outlined in the
consultation paper.
62
FINANCIAL INFRASTRUCTUREFINANCIAL INFRASTRUCTURE
Continue to maintain safety and efficiency of financial infrastructure
Continue to enhance financial infrastructure, especially for supporting the continual growth of RMB business in Hong Kong
the operating hours of the RMB RTGS system in Hong Kong were extended from 10 hours to 15 hours, from 8:30 to 23:30 (Hong Kong time), starting from 25 June 2012
cross-border joint direct debit transfers service between Hong Kong and Guangdong Province through HKD and RMB China UnionPay debit cards issued in Hong Kong and directly debiting RMB accounts in Hong Kong was launched smoothly on 3 July 2012
Developing a trade repository for over-the-counter derivatives trades to enhance market surveillance and transparency, and bring Hong Kong in line with international standards
Operation of financial infrastructure
• The HKD, USD, EUR and RMB Real Time Gross Settlement (RTGS) systems
and the Central Moneymarkets Unit (CMU) have been operating smoothly.
Financial infrastructure to support RMB business
• To better serve financial institutions in different regions for offshore RMB business through the Hong Kong infrastructure and enhance the competitiveness of the RMB clearing platform in Hong Kong, the daily operating hours of the RMB RTGS system were extended from 10 hours to 15 hours starting from 25 June 2012. The extended operating window covers both the Asian and European business hours, and early US business hours.
• The cross-border joint direct debit transfers service between Hong Kong and Guangdong is modelled on a similar service between Hong Kong andShenzhen. It provides Hong Kong residents with a more convenient payment channel for making regular and recurring cross-border small-value payments to merchants in Guangdong Province, such as payment of property management fee and utilities bills.
Trade Repository
• The system development work for the trade repository (TR) has been progressing as scheduled. The system will be launched by the end of this year to support central clearing of OTC derivatives transactions. The reporting service of the TR will be launched shortly before the relevant legislation takes effect.
63
RETAIL PAYMENT INITIATIVESRETAIL PAYMENT INITIATIVES
Press conference held on 4 September 2012 to announce the HKMA’s strategic plan for developing retail payment infrastructure inHong Kong
Progress made so far:
Electronic bill presentment and payment (e-bill) system: About 20 banks committed to participate in the proposed platform system to be launched in the second half of 2013
e-cheque: soft consultation underway and to be completed by the end of 2012 tentative launch date near the end of 2014
Near Field Communication (NFC) mobile payment: consultancy firm appointed to conduct a study and advise on the
strategy to facilitate NFC mobile payment development in Hong Kong consultancy report expected to be issued in the first quarter of 2013
Retail Payment Initiatives• A press conference was held on 4 September 2012 to announce the HKMA’s three-
pronged strategy of enhancing the retail payment infrastructure and instruments in Hong Kong. The strategy include: (i) moving from paper-based and semi-electronic payment instruments to a fully electronic platform; (ii) exploring the possibility of developing a common interface for Near Field Communication (NFC) mobile payment; and (iii) enhancing the legislative framework to cover innovative payment instruments.
e-bill system• The e-bill system aims to enhance the public’s experience by providing a centralised
platform for them to view, manage and pay regular and non-regular bills. Two industry briefing sessions were held on 30 and 31 August. As of now, about 20 banks have committed to participate in the proposed platform. The e-bill system is scheduled for launch in the second half of 2013.
e-cheque
• The HKMA is conducting a study on e-cheque which will provide an additional innovative, safe and efficient payment channel for the public to make payment. e-cheque will be issued, delivered and presented through electronic means, thus saving the need for physical delivery and presentment. Soft consultation with the banking industry continues to gauge their views on the operating model, and will be completed within 2012. System development is expected to commence in early 2013 with the tentative launch date in 2014.
NFC mobile payment
• The HKMA has appointed a consultancy firm to conduct a feasibility study and advise the strategy and approach of establishing an interoperable NFC mobile payment infrastructure in Hong Kong. Indeed, Hong Kong is in the initial stage of NFC mobile payment development and a few NFC mobile payment services will be rolled out in the next few months. It is timely for us to conduct the study in response to the market needs for interoperability and portability. Stakeholder interviews are under way and the study will be completed in the first quarter of 2013.
64
HONG KONG AS AN HONG KONG AS AN INTERNATIONAL INTERNATIONAL
FINANCIAL CENTREFINANCIAL CENTRE
65
Further expansion of RMB trade settlementFurther expansion of RMB trade settlement
RMB trade settlement handled by banks in Hong Kong
Flows of RMB trade settlement between Hong Kong and the Mainland
0
100
200
300
400
500
600
700
800
Q1 Q2 Q3 Q4 Q1 Q2 Q30
100
200
300
400
500
600
700
800
RMB bn RMB bn
20122011
0
50
100
150
200
250
300
350
Q1 Q2 Q3 Q4 Q1 Q2 Q30
50
100
150
200
250
300
350Payments from Hong Kong to the Mainland
Payments from the Mainland to Hong Kong
RMB bn RMB bn
20122011
Hong Kong’s offshore RMB business continued to grow steadily in the first
three quarters of 2012.
In the first nine months of 2012, RMB trade settlement handled by banks in
Hong Kong amounted to RMB 1,930 billion yuan, already exceeding the
annual total of 2011, while the payment flows to and from the Mainland are
balanced.
66
0
100
200
300
400
500
600
700
800
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
0
100
200
300
400
500
600
700
800
RMB bn RMB bn
Steady development of RMB financing activitiesSteady development of RMB financing activities
RMB customer deposits and certificates of deposit (CDs)
Outstanding RMB CDs issued (quarter-end)
RMB customer deposits (quarter-end)
Total
RMB financing activities
RMB dim-sum bond market
RMB bank lending
Jan - Sep2012
Jan - Sep2011
Amount of issuance
(RMB billion)
No. of issuers 59 65
93.8 85.8
End-Sep2012
End2011
OutstandingRMB loans(RMB billion)
67.9 30.8
2010 2011 2012
• At end-September, the outstanding amount of RMB customer deposits and CDs
issued amounted to RMB 545.7 billion yuan and RMB 115.4 billion yuan
respectively, totalling RMB 661.1 billion yuan.
• Banks have been offering RMB services to personal customers who are non-Hong
Kong residents since August. At end-September, over 12,000 RMB accounts
were opened by non-resident personal customers, with deposits amounting to over
RMB 800 million yuan.
• Alongside with the steady development of RMB bank lending and the dim-sum
bond market, the range of RMB investment products has been expanding. A-share
exchange traded funds, RMB currency futures and RMB shares are now available
in the Hong Kong offshore RMB market.
67
Entrenching role of Hong Kong as global hub for Entrenching role of Hong Kong as global hub for RMB settlement and correspondent bankingRMB settlement and correspondent banking
Sep 2012 2011 Change
1 No. of participating banks of Hong Kong's 199 187 +6%
RMB clearing platform
Of which: 176 165 +7%
Branches and subsidiaries of overseas banks
and overseas presence of Mainland banks
2 No. of RMB correspondent accounts set up by 1,315 968 +36%
overseas banks at Hong Kong banks
3 Amount due to overseas banks 94.2 116.4 -19%
(RMB billion at period-end)
4 Amount due from overseas banks 113.3 121.7 -7%
(RMB billion at period-end)
68
INCREASING REGIONAL AND INCREASING REGIONAL AND INTERNATIONAL FINANCIAL COINTERNATIONAL FINANCIAL CO--OPERATIONOPERATION
Financial Stability Board (FSB)
• HKMA attended the FSB Plenary Meeting held on 10-11 October. The meeting reviewed the key risks pertinent to global financial stability and the progress of regulatory reforms. Key areas of work include, among others, finalising the enhanced prudential framework for domestic systemically important banks, implementing over-the-counter derivatives market reforms, strengthening regulation of the shadow banking system and reviewing the FSB governance structure
Executives' Meeting of East Asia-Pacific Central Banks (EMEAP)• HKMA has taken up the chairmanship of the EMEAP Monetary and
Financial Stability Committee (MFSC) for a two-year term starting in July 2012. The MFSC is the main EMEAP platform for reviewing economic and financial developments in the Asia-Pacific region, identifying areas of vulnerability and recommending broad policy options in the areas of regional macro-monitoring and crisis management. The next MFSC meeting will be held on 16 November
69
INVESTMENT ENVIRONMENT INVESTMENT ENVIRONMENT AND PERFORMANCE OF AND PERFORMANCE OF THE EXCHANGE FUNDTHE EXCHANGE FUND
70
INVESTMENT ENVIRONMENT IN Q1 INVESTMENT ENVIRONMENT IN Q1 -- Q3 2012Q3 2012
• Exchange rates: The Euro weakened in Q2 as market sentiment deteriorated over the developments in the European peripheral countries, but subsequently rose as the European Central Bank’s plan to purchase sovereign bonds allayed investors’ concerns. The yen weakened against the dollar slightly over the period
• Equity markets: Amid heightened concerns about economic environment in Euro-zone, major equity markets in developed economies suffered a correction in Q2 that erased most of the gains recorded in Q1, but rallied in Q3 (except Japan) on investor optimism that more accommodative monetary policies of the major central banks would be forthcoming
• Interest rates: Extension of low rate guidance by the Fed supported US Treasuries and pushed the yields lower in the first three quarters. Other major government bond yields moved largely in tandem with the Treasury yields
71
CURRENCY MARKETSCURRENCY MARKETS
1.20
1.23
1.26
1.29
1.32
1.35
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12
75
78
81
84
87
90
USD/Euro FX Rate Yen/USD FX Rate
Yen/USD FX Rate (RHS)
USD/EURO FX Rate (LHS)
72
EQUITY MARKETSEQUITY MARKETS
90
100
110
120
130
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12
Hang Seng Index DAXS&P 500
Normalized Index Level (2011 year-end = 100)
CAC
73
CHANGES IN 10CHANGES IN 10--YEAR YEAR GOVERNMENT BOND YIELDSGOVERNMENT BOND YIELDS
1.0
1.3
1.6
1.9
2.2
2.5
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12
0.7
0.8
0.9
1.0
1.1
1.2US (LHS)
Japan (RHS)
Eurozone (LHS)
UK (LHS)
Yield (%)
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
US Japan Eurozone UK
2012 Q1-3 bond yield change (bps)
74
INVESTMENT INCOMEINVESTMENT INCOME
Q3
48.911.6(24.2)Hong Kong equities^@
0.81.70.7Other investments&
107.779.427.1Investment income@&
9.8(3.1)(9.1)Foreign exchange
48.827.1(12.2)Other equities^
(0.6) 42.171.9Bonds#
Full YearFull YearFull YearJan - Sep*(HK$ billion)
200920102011I 2012 I
* Unaudited figures
^ Including dividends# Including interest@ Excluding valuation changes in Strategic Portfolio& Including valuation changes of investment held by EF’s investment holding subsidiaries
75
CHANGE IN INVESTMENT INCOME, PAYMENT TOCHANGE IN INVESTMENT INCOME, PAYMENT TOFISCAL RESERVES AND ACCUMULATED SURPLUSFISCAL RESERVES AND ACCUMULATED SURPLUS
(23.6)
(3.6)
(5.6)
(37.0)
22.6
(4.7)
0.2
27.1
Full year
2011
(1.8)(1.9)
Payment to HKSAR government funds and
statutory bodies#
Q1Q2Q3Jan – Sep*(HK$ billion)
(9.7)(9.6)Payment to Fiscal Reserves#
2012
(20.1)
(1.7)
(6.9)
(1.4)
0.1
(5.6)
31.0
Increase/(Decrease) in EF
Accumulated Surplus
(1.1)
Valuation change of Strategic Portfolio less
valuation change of investment held by
EF’s investment holding subsidiaries^
43.6Net investment income/(loss)
(0.9)Interest and other expenses
-Other income
44.5Investment income/(loss)
II
* Unaudited figures
# The fixed rate of fee payment is 5.6% for 2012 and 6.0% for 2011
^ Including dividends
76
HISTORICAL INVESTMENT INCOMEHISTORICAL INVESTMENT INCOME
24.821.6(41.4)22.127.12011*&
11.1(12.1)74.55.979.42010*&
(33.5)58.771.910.6107.72009*&
(14.6)(20.4)(48.3)8.3(75.0)2008*
(5.6)
26.3
12.5
13.6
(7.2)
41.1
26.5
(2.0)
Q2
61.8
37.1
19.0
14.1
8.4
(2.1)
10.4
Q3
N/A
33.4
36.0
7.3
33.0
33.5
26.3
13.6
Q4
44.5 N/A2012*&#
142.2
103.8
37.8
56.7
89.7
47.0
7.4
Full Year
20.72007*
18.22006
(2.1)2005
16.82004
6.72003
(3.7)2002
(14.6)2001
Q1Year
(HK$ billion)
* Excluding valuation changes in the Strategic Portfolio# Unaudited figures& Including valuation changes of investment held by EF’s investment holding subsidiariesN/A: Not Applicable
77
EXCHANGE FUND ABRIDGED BALANCE SHEETEXCHANGE FUND ABRIDGED BALANCE SHEET
76.8126.2Placements by HKSAR government funds and statutory bodies
23.224.5Placements by banks and other financial institutions
225.9258.7Certificates of Indebtedness
8.99.9Government-issued currency notes & coins in circulation
591.5567.9Accumulated Surplus
2,345.0======
2,488.0======
Total assets
2,345.0======
1,753.5
23.5
592.3
654.2
148.7
42.0
245.3
152.6
1,706.7
198.4
At31 Dec 2010
2,488.0======
1,920.1
32.8
663.5
655.8
148.7
63.1
238.2
120.6
1,844.4
221.7
At31 Dec 2011
Total liabilities and fund equity
Total liabilities
Other liabilities
Placements by Fiscal Reserves
Exchange Fund Bills and Notes
Balance of the banking system
LIABILITIES AND FUND EQUITY
Other assets#
Other equities
Hong Kong equities
Debt securities
Deposits
ASSETS
At30 Sep 2012*(HK$ billion)
* Unaudited figures# Including investment in EF’s investment holding subsidiaries amounted to HK$31.1 billion at 31 Dec 2011 and HK$14.7 billion
at 31 Dec 2010
78
HONG KONG HONG KONG MORTGAGE CORPORATIONMORTGAGE CORPORATION
79
Reverse Mortgage ProgrammeReverse Mortgage Programme
• By end-Oct 2012, 284 applications have been approved:
– Average age of borrowers: 71 years old
– Average monthly payout: HK$13,300
– Payment terms: 10-year (34%), 15-year (20%), 20-year (12%), life (34%)
– Average property value: HK$3.7 million
– Average property age: 30 years
• To launch 3 enhancements in November 2012
– lowering the minimum age of borrowers from 60 to 55
– increasing the maximum specified property value for payout calculation from HK$8 million to HK$15 million
– increasing the maximum lump-sum payout amount
80
SME Financing Guarantee Scheme (SME Financing Guarantee Scheme (““SFGSSFGS””))
In response to the request from the Government, the HKMC launched in May 2012 an 80% loan guarantee product under the SFGS until end February 2013 to assist SMEs in obtaining bank financing amid challenging economic conditions
The new product was well received by the market, as at 19 October 2012:
– 3,924 applications approved – total loan amount about HK$18 billion
– average loan interest rate and guarantee fee rate are 4.6% p.a. and 0.5% p.a. respectively
Over 2,800 SMEs involving 82,000 employees have benefitted under the Scheme
81
Microfinance SchemeMicrofinance Scheme
• Launched in June 2012 to operate over a pilot period of three years with a tentative aggregate loan amount of HK$100 million
• 6 banks and 5 non-governmental organisations have joined the Microfinance Scheme
• As at end-Oct 2012, the HKMC has received over 1,500 hotline enquiries, 56 formal loan applications, out of which 25 cases have been approved with loans totaling HK$6.5 million. 16 cases are pending vetting panel interview
82
Assessment of Risk on Hong KongAssessment of Risk on Hong Kong’’s s Financial Stability: Property MarketFinancial Stability: Property Market
MIP loan applications
Source: Hong Kong Mortgage Corporation
Note: As at end of March 2012, the delinquency ratio (over 90 days) of MIP portfolio was 0.001%