XN000022-1996-09-30 — Page 4

3

-

Within HK dollar deposits, savings and time deposits both rose, outweighing the decline in demand deposits. During the month, HK dollar savings deposits rebounded by 2.6%, having contracted by 0.8% in July, while time deposits rose further by 1.4%, after an increase of 1.5% in the preceding month.

On the other hand, HK dollar demand deposits fell sharply by 4.6%, having risen by a cumulative 6.8% during June and July.

The decline in foreign currency deposits was due entirely to a 2.2% fall in non- US dollar foreign currency deposits, while US dollar deposits were up by 0.6%.

Loans and advances

Total loans and advances edged lower by 0.3% in August, following an increase of 2.2% in July. The fall reflects a decline in offshore lending and a more moderate growth in domestic credit.

During the month, loans for use outside Hong Kong dropped by 0.8%, as the outstanding value of yen loans was eroded by the depreciation of the yen.

Loans for trade financing fell further by 1.9%, after a 0.5% decline in the preceding month, consistent with the slow growth in external trade. Other domestic loans increased by only 0.6%, partly attributable to the slow-down in the growth of mortgage loans in August, which was in line with the relatively quiet property market during the month.

Analysed by currency, HK dollar loans increased by 0.3% during the month while foreign currency loans fell by 0.6%. As HK dollar loans declined while HK dollar deposits rose, the HK dollar loan-to-deposit ratio fell to 107.6% at end-August, from 108.6% at end-July.

Money supply

HK$M1 dropped by 2.5%, as the decline in HK dollar demand deposits outweighed the rise of 0.6% in currency held by the public. On the other hand, HK$M2 and HK$M3 both increased by 1.2% during the month, after rising by 1% and 0.9% respectively in July.

The growth in HK$M3 of 12.7% during the year to August continued to be broadly in line with recent domestic credit expansion and nominal GDP growth.