XN000022-1995-04-28 — Page 9

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Deposits

Total HK dollar deposits grew by 2.2% in March 1995, compared to 2.1% last month. All types of HK dollar deposits rose during the month. HK dollar demand deposits, savings deposits and time deposits rose 5.9%, 0.3% and 2.4 % respectively

Possible reasons for the rise in HK dollar demand deposits include increased transaction demand in part due to the improved performance of the local asset markets, and the unwinding of Chinese New Year effect on notes in circulation with the public.

The growth of foreign currency deposits moderated from 3.7% in February to 3.2% in March. The rise was mainly in non-US dollar deposits which increased by 6.8% mostly due to the valuation effect from the weakening of the HK dollar during the month.

Swap deposits continued to decline. The 10.4% reduction in March brought the total decline since the November peak to 32%. This is mostly due to the gradual removal of the Hong Kong Association of Banks' interest rate cap which has made HK dollar time deposits a preferred alternative.

Loans and Advances

Total outstanding loans and advances extended by AIs expanded notably by 4.5% in March, up from 2.1% in February. Foreign currency loans grew particularly strongly during the month, again at least partly due to the valuation effect. The growth in HK dollar loans, however, rose slightly from 0.7% in February to 1.1% in March.

Quarterly analysis of loans for use in Hong Kong by sector

During the March quarter of 1995, total loans for use in Hong Kong (excluding those for trade financing) increased by 2.8%.

Of these, the growth of loans to purchase residential property (excluding flats in the Home Ownership Scheme and Private Sector Participation Scheme) picked up during the quarter, from 1.4% in the preceding quarter to 1.6% in this quarter.

Outstanding loans to other major economic sectors showed varied performance.

Loans to the manufacturing sector grew strongly by 6.7% during the quarter, following the 5% growth in the preceding quarter, reflecting the pick up of domestic exports and re-exports.

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