XN000022-1996-11-29 — Page 32

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The fall in foreign currency deposits was entirely due to a further decline of 0.7% in non-US$ foreign currency deposits, while US$ deposits were up by 0.5%. Non-US$ foreign currency deposits have fallen for three months in a row, cumulating a total reduction of 3.6%.

Loans and advances

Total loans and advances grew slightly by 0.1% in October, following a decline of 0.9% in September. The rise reflects a further expansion in domestic credit by 1.0%, which more than offset the decline of 0.7% in offshore loans. Of the domestic credit, loans for trade financing fell further by 0.7% in October, after a decline by 3.7% during the September quarter. On the other hand, other loans for use in Hong Kong continued to increase by 1.2%, fueled by a further strong growth in mortgage

loans.

The result of the October 1996 Residential Mortgage Survey of 33 authorised institutions showed that outstanding residential mortgage loans grew by 2% during the month, the highest growth rate since June 1995.

As for offshore loans, the contraction can largely be attributable to the valuation effect stemming from a further depreciation of the Japanese yen.

Analysed by currency, HK$ loans increased by 0.8% during the month while foreign currency loans declined by 0.3%. As HK$ loans grew slower than HK$ deposits, the HK$ loan-to-deposit ratio fell from 106.2% at end-September to 103.9% at end-October.

Money supply

HK$M1 rose by 0.9% in October as the rise in HK$ demand deposits more than offset the 1.1% decline in currency held by the public. Compared to a year earlier, HK$M1 rose by 10.2%. The strong transaction demand for money was boosted by improved retail sales and the more active asset markets. HK$M2 and HK$M3 both increased by 2.6% in October, having risen by 1.8% in September.