UPDATE:Hong Kong Banks Keep Prime Rates Steady;Tight Credit Seen 1st Half
29 Gennaio 2009 - 11:41AM
Dow Jones News
Major Hong Kong banks held prime lending rates steady Thursday
in line with the U.S. Federal Reserve, but analysts expect tighter
credit in the first half of 2009 due to the gloomy economic
outlook.
The Hong Kong Monetary Authority matched the Fed's decision to
leave benchmark rates unchanged, keeping its base rate at 0.50%.
Commercial lenders who have been refusing to go along with recent
Fed rate reductions kept their own prime rates steady.
Analysts predicted commercial banks could soon raise mortgage
rates, at a time when they aren't overly concerned about aggressive
lending because the property market is weak.
"They're probably happy with the existing loan portfolios and
market share, given the mortgage market isn't as fierce as it was,"
said Standard Chartered fixed-income strategist Frances Cheung.
"If there's any change, it'll be the mortgage rate to be
adjusted first," Cheung said.
HSBC Holdings PLC (HBC) unit Hongkong & Shanghai Banking
Corp. said Thursday it is keeping its prime lending rate unchanged
at 5.00%. Hang Seng Bank Ltd. (0011.HK), another HSBC unit, and BOC
(Hong Kong) Ltd. (2388.HK) also held their prime rates steady at
5.00%.
HSBC spokeswoman Dora Cheung said growing cost pressures and
narrowing interest margins are giving Hong Kong banks no room for
more rate cuts.
Hong Kong interbank offered rates have eased sharply since
peaking in September, prompting a series of interventions in the
currency market by the HKMA that were valued at more than HK$180
billion.
Although the HKMA typically moves in tandem with the Fed,
commercial banks are able to set their own rates and they refused
to go along with four Fed rate cuts between October and December
that brought the federal-funds rate to as low as zero from the
previous 3.50%.
The Federal Reserve's policy-setting board on Wednesday kept its
target for the fed-funds rate unchanged at zero to 0.25%.
While holding rates steady, Hong Kong lenders in November began
raising mortgage rates by 50 to 150 basis points as property prices
and transactions fell sharply.
The total value of property transactions in December fell 65.1%
to HK$20.5 billion from a year earlier, Land Registry data
show.
-By Jackie Cheung and Chester Yung, Dow Jones Newswires;
852-2802-7002; jackie.cheung@dowjones.com
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