ENG-2012 — Page 103

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Financial and Monetary Affairs

chaired by the Financial Secretary and comprise members from the banking industry and other professions.

The HKMA seeks to maintain a regulatory framework that is fully in line with international standards. The aim is to devise a prudential supervisory system to help preserve the general stability and effective operation of the banking system, while at the same time providing sufficient flexibility for Als to make commercial decisions.

Recent Developments

The Hong Kong banking sector remained robust in 2012, despite the heightened uncertainties in the global economy and external environment. Credit growth moderated during the year and liquidity conditions improved. Asset quality remained sound and locally incorporated Als continued to be well capitalised.

At the end of 2012, Als' deposit liabilities to customers and the loans and advances extended by Als totalled $8,296.4 billion and $5,567.6 billion respectively, 9.3 per cent and 9.6 per cent higher than a year earlier. Als' total assets also rose 8.1 per cent, to $14,858.1 billion.

Statistics on Als

2010

2011

2012

Als

193

198

200

Of which:

LBs

146

152

155

RLBS

21

20

21

DTCs

26

26

24

Local branches of Als

1,413

1,422

1,404

Total customer deposits ($ billion)

6,862.3

7,591.3

8,296.4

Total loans and advances ($ billion)

4,227.7

5,080.7

5,567.6

Total assets ($ billion)

12,290.8

13,741.8

14,858.1

The risk of an overheating property market in Hong Kong increased further in 2012. The HKMA remained vigilant towards Als' mortgage lending and in September introduced the fifth round of countercyclical macroprudential measures to further lower the loan-to-value and debt- servicing ratios for borrowers with multiple outstanding mortgage loans. The measures introduced since 2009 have enhanced banks resilience to a property market downturn. The HKMA also reviewed the major Als' underwriting policies for car park mortgages and asked Als to ensure their underwriting policies were in line with the good practices identified in the review. To increase the local banking system's resilience, the first phase of the Basel III standards. will be implemented in accordance with the Basel Committee's international timeline.

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