The Hong Kong Mortgage Corporation Limited

The Hong Kong Mortgage Corporation Limited (HKMC) made the following announcement today (Thursday 18 September 2008).

Half-Year Financial Results for 2008

The HKMC and its subsidiaries (the HKMC Group) are pleased to announce the half-year financial results for 2008. The unaudited profit after tax (PAT) for the six months ended 30 June 2008 (1H 2008) was HK$333 million, HK$78 million lower than the first six months in 2007 (1H 2007). The annualised return on shareholders' equity was 11.6% (1H 2007: 15.4%). The capital-to-assets ratio remained strong at 9.3% at 30 June 2008, prudently above the minimum 5% stipulated by the Financial Secretary. The cost-to-income ratio was 15.1% for first half of 2008 (1H 2007: 11.2%). The financial results of the HKMC Group are at Annex.

The loan purchased in 1H 2008 amounted to HK$6.8 billion (1H 2007 purchase was HK$603 million). Taking into account loan repayments and prepayments, the outstanding principal balance of the loan portfolio increased by 5.2% from HK$34.5 billion at the end of 2007 to HK$36.3 billion as at 30 June 2008.

The Mortgage Insurance Programme (MIP) continued to enjoy good public acceptance - mortgage insurance coverage for newly originated mortgage loans was HK$11 billion (1H 2007: HK$5.8 billion) and the market penetration ratio at end-June 2008 was around 14%. As 94% of the MIP loans drawn down in 1H 2008 was secured on properties in the secondary market, this was a clear demonstration of the importance of the MIP to help homebuyers in the secondary market.

In terms of debt issuance, the HKMC issued a total of HK$12.7 billion corporate debts under its Debt Issuance Programme and Retail Bond Issuance Programme in first half of 2008, and remained as the most active corporate debt issuers in the Hong Kong dollar debt market. In June 2008, the HKMC offered a total of HK$540 million equivalent of retail bonds to the public. Moreover, the HKMC successfully issued debut US dollar and Singapore dollar corporate debts to diversify its investor base and funding sources in the international bond market, raising a total of HK$4.3 billion equivalent under its Multi-currency Medium Term Note Programme. This also helps to further develop a quasi-sovereign benchmark for Hong Kong to further promote the development of the regional bond market. As at 30 June 2008, the total amount of outstanding debt securities and MBS were HK$41.9 billion and HK$4.1 billion respectively.

The HKMC's long-term foreign and local currency debt ratings are Aaa (stable outlook) from Moody's and AA+ (stable outlook) from Standard & Poor's. The Corporation will seek to improve its product range and diversify its businesses both locally and overseas to maintain its viability and strengthen its ability to provide liquidity to local banks and meet mortgage insurance needs of the homebuyers.

The Hong Kong Mortgage Corporation Limited
18 September 2008