Macao's banking sector in fierce fight for profit margin

The comeback of the overall economy has created rooms for development for Macao's banking sector, but banks need to fight for the profit margin, said Zhang Hongyi, general manager of the Bank of China Macao Branch (BOC Macao).

"The market is too small, and there are 24 banks pegged in an international competition here," Zhang said in a recent interview with Xinhua.

According to BOC Macao's statistics, the banks in Macao profited in a total of 1 billion patacas (125 million US dollars) in the year 2003. The accumulated deposit was added up to 131.7 billion patacas (16 billion US dollars) by the end of last year, and the extended credit worth 47.6 billion patacas (6 billion US dollars).

The plummet of the US dollar's interest rate, which has lingered for three years, has narrowed down the profit margins forthe banks. On the small market in Macao, the banking competition has become so furious that it reached a "cut-throat" level, he said.

However, the consecutive and fast growth of the economy, which gathered speed in 2002, jumped on a fast track to reach 15.6 percent in 2003. Investment in tourism, gaming, foreign trade as well as infrastructure construction are all on rise, which has given opportunities for the banking business, Zhang said.

He added that the RMB business launched in Hong Kong on Feb. 25 has proved to be swift and promising. If the Macao SAR government could reach a similar agreement with the central government on launching the business in Macao, it would be a golden opportunity for banks to produce new financial products and profits.

He held that the interest rate of US dollar is expected to reverse the downturn in the second half of this year. "If it was so, the blossoming spring season would finally come for banks," hesaid.

Banks in Macao had a bitter lesson in the investment in the real estate market, during a real estate "bubble" appeared in the mid 1990s. The market atmosphere has gradually recovered in the recent two years, but has not yet reached an overall level, according to Zhang's analysis. Enditem