| Abstract | Reflecting excess liquidity, average funding costs eased and loan-to-deposit ratios continued to improve during the December quarter. Despite the further shrinkage in customer lending, the decline in domestic lending continued to moderate compared with the first half of the year. Preliminary figures indicated that operating profits of local banks also improved in aggregate, although there were wide variations in performance. The recovery was helped by the increase in interest-bearing assets and some improvement in the net interest margin. The provisional figures for December show signs of improvement in local banks' asset quality, though this was partly influenced by other factors such as write-offs made by banks before the December year-end. While some local banks increased their provisions further in 1999, the bad debt charge as whole rose only slightly compared with 1998. |
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