cope with the ever changing economic and financial environment. the level of corporate governance of macao banks remains sound in general, as evidenced by their ability to survive the various economic downturns and financial crises in the past decades, and the results of past assessments initiated by international regulatory bodies, such as the international monetary fund ( imf ). the macao financial system act, promulgated in 1993, established the essential elements of corporate governance for credit institutions. among all these requirements, fit and proper reviews of shareholders and managers, preventive procedures for conflicts of interests and restrictions on exposures to shareholders and managers form the framework of proper standards of ethical conduct. in the internal control guideline introduced by the monetary authority of macao in 2002, a benchmark of best practices was suggested to promote corporate governance for all credit institutions, including the emphasis of high moral and integrity standards to be applied to the board of directors and senior management, appropriate measures for checks and balances as well as segregation of duties, in line with the corporate governance principles promoted by the organization for economic cooperation and development ( oecd ) as well as the basel committee on banking supervision ( bcbs ). corporate governance is not a new issue at all. the asian financial crisis exposed the longterm consequences of incompetent corporate governance. the recent fiascos of some major international financial institutions arising from subprime fallout again signify the importance of maintaining high standard of corporate governance. this seminar is both timely and relevant against contemporary global economic and financial backdrop. in the coming three days, i hope that experts and delegates could make use of this opportunity to exchange their precious experiences and views on this topic. in conclusion, i wish this seminar a tremendous success and may all of you have good health and enjoy a pleasant stay in macao. thank you!

to the bank ’ s most recently published data, it increased its holdings of loss - absorbing capital by roughly three - quarters in the second half of 2012. in addition to retaining profits, this increase is mainly attributable to the capital measures announced in july, which have already been implemented to a large extent. in addition, as part of their strategic reorientation, both big banks announced measures which will further enhance their resilience. for instance, both institutions are planning to further expand their loss - absorbing capital, to reduce their risks and, in particular, trim their balance sheets as well as to pursue a policy of dividend restraint. the national bank welcomes the increase in the big banks ’ resilience achieved thus far, as well as the announced measures to further improve their capital situation. the consistent bis central bankers ’ speeches implementation of these measures is important for two reasons : first, leverage has remained high despite the improvement in the capital situation. second, the risks in the environment – and thus the associated potential losses for the big banks in the event of a further escalation of the european debt crisis – remain considerable. situation at domestically focused banks i would now like to turn to the situation at domestically focused banks. the risks associated with the environment in which these banks operate increased during the past six months. indeed, the isolated signs of a slowdown of growth in the mortgage and real estate markets observed in the second quarter did not materialise in the third quarter. in particular, prices in the different segments of the residential real estate market continued to rise at a sustained pace. at the same time, growth in the mortgage loan volume was still considerably higher than gdp growth. imbalances have therefore grown. as far as risk appetite and capitalisation are concerned, the situation of domestically focused banks has not changed significantly during the last six months. on the one hand, banks ’ risk appetite has not diminished overall. this is substantiated by the following : first, in the case of new mortgage loans, both the loan - to - value ratios and loan - toincome ratios have remained at a high level. second, interest rate risk has not declined and remains high. third, the already low margins on interest income have continued to decrease. there are nevertheless considerable differences from one bank to another, in particular as to how their risk appetite has evolved. certain banks have reduced their risk - taking significantly during the last quarters, while others have increased their exposure to risk