Loans for mortgages, building, and construction drove quarterly gains.

Hong Kong banks’ total loans and advances rose by 1.1% in June with loans for use inside the city up 1.2% and those outside the territory up 0.8%, according to a statement from the Hong Kong Monetary Authority (HKMA).

Also read: Banks make do with falling loan growth as earnings lifeline

In Q2, loans for use in Hong Kong grew 2.3% from 2.2% in the previous quarter as borrowing for residential mortgage and loans used for buliding, construction, property development and investment drove quarterly gains.

With increases in time deposits exceeding decreases in demand and savings deposits, Hong Kong-dollar deposits went up by 0.5% during the month. Overall foreign-currency deposits decreased by 0.4% in June. Renminbi deposits in Hong Kong decreased by 3.2% to $85.62b (RMB604.2b) at the end of June.

The Hong Kong-dollar loan-to-deposit ratio climbed to 89.3% in June from 88.3% in May, as Hong Kong-dollar loans increased at a faster pace than Hong Kong-dollar deposits.

The seasonally-adjusted Hong Kong-dollar M1 decreased by 0.8% in June and declined by 4.1% YoY. With the increase in Hong Kong-dollar deposits exceeding the decline in foreign-currency deposits, total M2 and M3 both rose 0.1% in June and grew by 4.0% YoY.

Loan growth is tipped to slow to 2% by end-2019 from 5% in the previous year as trade and mortgage loans take hit, Fitch Solutions said in an earlier report.