Anselmo Teng: Macao's financial sector development
Address by Mr Anselmo Teng, Chairman of the Monetary Authority of Macao, at the 2011
Monetary Authority of Macao (Autoridade Monetária de Macau - AMCM) Spring Cocktail,
Macao SAR, 29 March 2011.
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The Honourable Secretary for Economy and Finance, Mr. Francis Tam,
The Honourable Deputy Director of the Economic Affairs Department of the Liaison Office of
the Central People's Government in the MSAR, Mr. Chen Xiang,
The Honourable Deputy Director-General of the Office of the Commission of the Ministry of
Foreign Affairs in the MSAR, Ms. Han Xiao-yan,
The Honourable Chairman of AMCM Audit Committee, Mr. Leonel Alberto Alves,
Honourable Guests,
Friends of the Press,
Dear colleagues,
A Chinese poem portrays a fine day in Spring like today, "The mellow wind from the East is
soothing which embodies a warm day in Spring when everything starts anew. The early
goldfinches compete for warm branches while newly arrived swallows are busy in picking
dirts for nest". At the beginning of the Year of the Rabbit, following our fine tradition, the
Monetary Authority of Macao hosts again a Spring Cocktail Party. This afternoon, we are
honoured to have the presence of Mr. Francis Tam, Secretary for Economy and Finance to
come to officiate this occasion and to share with our friends of the financial sector the joy of
lucrative results achieved in the year of the Tiger and to bid well wishes to each other. I duly
represent the AMCM Board of Directors to thank Mr. Tam for his presence. Simultaneously, I
would like to extend my warm and candid appreciation and welcome to our guests,
practitioners of our financial sector, and friends of the press.
In the past year, under the care and auspices of the Central Government, the endeavour of
our citizens led by the MSAR Government, Macao saw encouraging results scored by its
pillar industry in tandem with the gradual global economic recovery. All walks of trade in
Macau displayed vitality again. The overall economy scored remarkable GDP growth of
26.2%. Under the direction and support of Mr. Tam, AMCM and our financial practitioners
have been able to maintain the stability of our financial system. Our financial sector grasped
the development opportunity, enhanced internal control and risk management, which
reinforced its ability to combat risk and effectively staved off threats arising from crisis from
abroad; perfected financial services and promoted market development.
To AMCM, last year was a year of consolidating the financial sector through continued
enhancement of financial risk supervision. In the aftermath of the financial crisis, AMCM
followed up-to-date development of international financial supervision, continued to
strengthen financial supervisory work in line with the fresh standards and requirements
imposed by the Basel Committee on Banking Supervision. At the same time, AMCM rolled
out specific guidelines on risk mitigation, which reinforced the legal aspect of financial risk
management to assist our practitioners in their risk-aversion endeavour.
Through the collective endeavour of our financiers, the Macao banking sector, in the midst of
overall economic recovery, scored results with flying colours again, which laid down solid
foundation in the realization of our long term sustainable development. As per the end of
2010, total assets of the banking sector amounted to MOP540 billion, a year-on-year growth
of 26.5%; aggregate deposits totalled MOP341.5 billion, a year-on-year growth of 11.3%,
while loan portfolio stood at MOP245.7 billion, a year-on-year growth of 31.7%, making a
loan deposit ratio of 71.9%; initial overall profit for the banking sector amounted to
MOP3.54 billion. The whole banking sector had a high capital adequacy ratio of 15.3%,
which far exceeded international standard; non-performing loan ratio was a meagre 0.4%,
which reflected fine asset quality. As for RMB business, as per end of 2010, RMB deposits
amounted to RMB 13.3 billion, a year-on-year expansion of 5.9 times; in February 2011, it
went up to RMB23.2 billion, an increase of 74.4% compared to 2010 end. At the same time,
banks settled RMB business valued at RMB6 billion for the period starting October 2009,
when cross border RMB trade settlement business started, to end of 2010. Moreover, to
widen the spectrum for investment and fund management for Macao residents and
institutions, with the green light given by the People's Bank of China, the settlement channel
for Macao entities in the purchase of RMB bonds issued in Hong Kong was opened.
In the realm of insurance supervision, apart from perfecting offsite surveillance measures,
the inspection and appraisal of financial status of insurance companies were also
strengthened. In addition, via the supervision of adequacy of technical reserves of insurance
companies, the risk-resistance and indemnity payment capability of insurance companies
was enhanced. In the year, supervision and onsite inspection of insurance companies,
pension funds management companies and insurance intermediaries were strengthened with
a view to appraising their compliance and implementation of provisions under compulsory
insurance regulations, AML/CFT guidelines and internal supervision applicable to various
insurance institutions.
With the benefit of the recovery of the overall economic vitality, coupled with appropriate and
effective supervision, the insurance sector of Macao operated in a stable manner last year,
various premiums registered stable growth, profits were up to expectation. As per the end of
2010, total premiums for the insurance sector reached MOP3.78 billion, a year-on-year
growth of 15.7%, of which life insurance premiums were MOP2.69 billion, a year-on-year
growth of 15.3%, while non-life insurance premiums reached MOP1.09 billion, a year-on-year
growth of 16.7%. On the other hand, pension funds management institutions also displayed
their function in providing social protection and maintaining social stability. As per the end of
2010, total assets of funds under the management of such institutions exceeded
MOP6.2 billion, which covered more than 80,000 employees, the growth rates were 24% and
6.7% respectively.
The pace of economic recovery for advanced industrial nations remained slow. Headed by
the FED of the US, central banks of western nations took one step further in quantitative
easing in formulating their monetary policy. As a result, interest income derived from major
overseas financial markets stayed at a historically low level all year round. At the same time,
in the face of sovereign debts of the Eurozone and financial crisis arising therefrom, prices of
financial products and currency exchange rates exhibited greater volatility. Against such a
backdrop, AMCM adopted a more prudent investment strategy for the exchange reserves
and the MSAR Reserve Fund. As per the end of 2010, our exchange reserves stood at
MOP190.2 billion, a year-on-year growth of 29.8%, or MOP43.6 billion. The MSAR Reserve
Fund also grew by MOP300 million to MOP13.1 billion, or a growth of close to 2.3%;
basically fulfilled the target of maintaining growth and its intrinsic value.
The year saw the expiry of the issuing right of Pataca notes of the two notes issuing banks.
After negotiation, a new 10 year notes issuing agreement was signed with the two banks,
which would ensure issuance and supply of Pataca notes. In addition, in the realm of
enhancement of financial infrastructure facilities, the seriously mooted Pataca Real Time
Gross Settlement (RTGS) finalized its initial open tender process in the year and will enter
into system development phase. Once implemented, the RTGS will enhance the efficiency of
Pataca fund availability and settlement.
On the financial research and statistics front, we actively participated in the cooperation with
international organizations in items relating to money, finance, economics and statistics. As a
result, data information was published in a timely manner, which enabled the quality of our
financial statistics dissemination to be aligned with international standards. Through
cooperation and communication with counterparts, we perfected financial data dissemination
mechanism and formed a systematic financial information dissemination platform. At the
same time, we embarked on studies on special topics conducive to the practical situation of
Macao and published the results, which would provide valuable reference to the MSAR
Government, financial sector, academia and the general public.
In our communication and cooperation with entities abroad, AMCM, as usual, continued to
deepen liaison with financial regulatory authorities of the Mainland of China and Lusophone
countries. We established communication mechanism via conclusion of memorandum of
understanding. On the back of the established regional cooperation agreement framework,
we enhanced cooperation with the Mainland, particularly the Pearl River Delta. On the other
hand, AMCM made use of the opportunity of the "3rd Ministerial Conference of the Forum for
Economic and Trade Cooperation between China and Portuguese Speaking Countries" held
in Macao to organize jointly with the Development Bank of China and solely two seminars
entitled "Conference of Financiers and Entrepreneurs of China and Portuguese Speaking
Countries" and "Financial Theme Seminar for Chinese and Portuguese Financiers"
respectively. The move further elevated the function of Macao as trade and economic
cooperation platform between China and Portuguese speaking countries. Simultaneously, it
created venue for communication and partnership for local financial institutions and their
counterparts in Portuguese speaking countries, which would enable the gradual exploitation
of new business opportunity for Chinese and Portuguese financiers.
Also, AMCM established a regular work liaison mechanism with China UnionPay and arrived
at consensus on cooperation to reinforce management of authorized accounts and risk
prevention.
Looking forward to 2011, we can expect global economic recovery to continue its cheerful
pace. However, there are a number of uncertain factors in the process. The sovereign debt
crisis of Eurozone may linger, which may lead to the necessary tight fiscal policy adopted by
some European countries and adverse effect arising from debt burden. Coupled with the fact
that protectionism may rear its ugly head, and the daunting effect of geopolitical risks of
Middle East and North Africa, negative impacts will be inflicted on world economic recovery.
As the underlying economic recovery appears moribund, it is the main stream view that
global interest rates will stay at a lower lever. However, it appears that inflation expectation is
gathering stream. The authorities concerned therefore have to make necessary preparation,
as the prevailing loose monetary policy may come to an end.
This year marks the inauguration of the "12th Five Year Plan" of our Motherland, which will
lay the foundation of stepping stone for a new phase of development. Following the gradual
realization of the "Outline of the Plan for the Reform and Development of the Pearl River
Delta Region", "Hengqin Island Overall Development Plan" and the "Guangdong-Macao
Cooperation Framework Agreement", the improvement and enhancement of the CEPA,
coupled with the strengthening of our role as the service platform for economic and trade
cooperation between China and Portuguese speaking countries, the implementation of all
these will bring more business opportunity and room for development to the Macao financial
sector. Certainly, our market practitioners are bracing for a bright new business world ahead.
Last but not the least, I would like to propose a toast to the continued prosperity, security,
strength and harmony of our Motherland and compatriots; to the sustainable development
and prosperity of the MSAR; to the steady growth and helpfulness of our financial sector; to
the health and success of our guests and friends. Cheers!