XN000022-1997-03-27 — Page 12

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Both US$ and non-US$ deposits increased in February. US$ deposits grew slightly by 0.3% during the month, after dropping by 2.7% in December 1996 and 0.3% in January 1997, while non-US$ foreign currency deposits rose further by 3.2%, following increases of 0.5% and 0.9% in December 1996 and January 1997 respectively.

Loans and Advances

Total loans and advances continued to expand. They grew by 2.6% in February, following a 0.1% rise in January. Domestic credit expanded by 4.7%, with the 0.9% contraction in loans for trade financing more than offset by a 5.3% increase in other loans for use in Hong Kong. The latter was largely attributable to the rapid rise of loans for share subscriptions and property-related lending. The result of the February 1997 Residential Mortgage Survey of 33 authorized institutions revealed that outstanding residential mortgage loans grew by 2.7% during the month. Offshore loans rebounded slightly by 0.7% in February, from a 3.1% decline in January.

HK$ and foreign currency loans rose by 5.7% and 0.7% respectively during the month. As HK$ loans expanded at a faster pace than HK$ deposits, the HK$ loan-to- deposit ratio rose further to 108.2% at end-February, from 106.1% at end-January.

Money Supply

HK$M1 fell by 5.9% in February, with currency held by the public falling by 3% and HK$ demand deposits dropping by 7.7%, as the transaction demand for money eased to a more normal level after the Chinese New Year holidays. In line with the rapid domestic credit expansion, HK$M2 and HK$M3 increased by 3.2% and 3.1% respectively in February, following rises of 2.7% and 2.6% in the previous month. In the twelve months to February 1997, HKSMI rose by 13.6%, HK$M2 increased by 22.6% and HK$M3 grew by 22.3%.