ENG-2014 — Page 107

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Financial and Monetary Affairs

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 provide sufficient flexibility for Als to make commercial decisions.

Recent Developments

The Hong Kong banking sector remained sound in 2014 despite the uncertainties surrounding the global financial market. Retail banks' asset quality remained good. The liquidity ratio was also maintained at a comfortable level. Locally incorporated Als continued to be well capitalised.

At the end of 2014, Als' total deposits and loans and advances increased to $10,073.9 billion and $7,276 billion respectively, up 9.7 per cent and 12.7 per cent from a year earlier. Als' total assets also rose 8.8 per cent to $18,435.9 billion.

Statistics on Als

Als

Of which:

LBs

RLBS

DTCs

Local branches of Als

Total deposits ($ billion)

Total loans and advances ($ billion)

Total assets ($ billion)

2012

2013

2014

200

201

203

155

156

159

21

21

21

24

24

23

1,404

1,384

1,370

8,296.4

9,178

10,073.9

5,566.8

6,457.4

7,276

14,858.7

16,943.5

18,435.9

The HKMA has always been vigilant towards Als' property mortgage business, which constitutes. a significant portion of their lending portfolios. The HKMA introduced six rounds of macroprudential measures between October 2009 and February 2013 to strengthen the resilience of banks, including tightening the maximum loan-to-value ratios for higher risk. property mortgages; applying more prudent criteria to assess the repayment ability of mortgage loan applicants; and limiting the maximum loan tenor for all new property and standalone car park space mortgage loans.

Securities and Futures Sector

Main Features

Hong Kong's securities market is operated by the SEHK and its futures market by the Hong Kong Futures Exchange Limited, both being wholly owned subsidiaries of the HKEX. At the end of 2014, there were 1,752 companies listed on the Main Board and the Growth Enterprises Market (GEM) of the SEHK with a total market capitalisation of about $25 trillion. With improved financial market conditions, total equity funds raised increased 149 per cent in 2014 to $943 billion, while the securities market's total turnover increased by 12.4 per cent, to $17.2 trillion, with 34.3 trillion shares traded.

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