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Loans and Advances

Total loans and advances fell slightly by 0.2% in December, following a rise of 2.5% in November. Domestic credit decreased by 0.5% in December, as a 1.2% increase in loans for trade financing was outweighed by a 0.7% fall in other loans for use in Hong Kong. The fall in the latter was, however, largely the result of the high base of comparison at end-November, which was boosted by loans for share subscription.

Offshore loans rose slightly by 0.1% in December.

Analysed by currency, HK$ loans fell by 1% while foreign currency loans grew by 0.3% during the month. As the decline in HK$ loans was more moderate than that of HK$ deposits, the HK$ loan-to-deposit ratio edged up to 103.3% at end-December, from 103.2% at end-November.

Quarterly Analysis of Loans for Use in Hong Kong by Major Economic Sector

Loans for use in Hong Kong grew faster by 4.5% in the December quarter, compared with the 2.0% increase in the September quarter.

Loans for trade financing rebounded by 1.4% in the December quarter and registered a 6.7% growth for 1996 as a whole.

Loans for building, construction and property development and investment and for residential mortgages grew further strongly, by 7.5% and 5.8% respectively, along with the buoyant property market.

Loans to financial concerns and stock-brokers also recorded notable growths of 6.7% and 25.5% respectively. Nevertheless, loans to the manufacturing sector were virtually unchanged, having slowed to an increase of 2.1% in the September quarter.

Loans for wholesale and retail trade also fell by 1.5%, after rising by a cumulative 7.9% in the preceding three quarters.

Money Supply

HK$M1 surged by 6.1% in December, led by an increase of 8.6% in HK$ demand deposits and a rise of 2.3% in currency held by the public. On the other hand, HK$M2 and HKSM3 both decreased by 0.7% in December, having risen by 14.9% and 14.8% in the preceding six months respectively.

During 1996, HK$M1 rose by 15.8%, HK$M2 increased by 19.3% while HK$M3 grew by 19%.

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