20 August 2019

StanChart sees rate rise pressure in HK amid US QE taper

Standard Chartered Plc. (02888.HK) expects interest rates to rise in Hong Kong this year as the US Federal Reserve’s move to scale back its quantitative easing tightens liquidity supply.

“Since the United States started to reduce asset purchases, the competition for deposits among banks has intensified,” Benjamin Hung, the lender’s chief executive for Hong Kong, said Friday. “The trend has continued through early this year.”

He said the bank will raise interest rates in the repricing of trade financing and short-term loans to offset the higher funding costs.

As the US taper adds to liquidity uncertainties, Hung expects local banks to become more cautious in capital allocation, resulting in a credit slowdown.

Hong Kong’s banking industry could see loan growth of 10 percent year on year this year, he said. That compares with a 16 percent rise in 2013, according to official data.

– Contact the reporter at [email protected]



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