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Press Releases

The Hong Kong Mortgage Corporation Limited Year 2003 Half-Year Financial Results

The Hong Kong Mortgage Corporation (HKMC) announced today (Wednesday) its Year 2003 interim results.

The unaudited interim results show that the profit after tax (PAT) for the six months ended 30 June 2003 was HK$150.9 million, an increase of HK$34.2 million or 29.3% compared with the PAT for the corresponding period of last year. The shareholder's equity increased by HK$150.9 million to HK$3.3 billion. The annualized return on average shareholder's equity increased to 9.4% (1H 2002: 8%). The cost-to-income ratio improved to 18.5% (1H 2002: 24.9%). The capital-to-assets ratio (CAR) remained strong at 8.2% (computing in accordance with the provisions in the Banking Ordinance, the CAR of the HKMC was 15.5%). The operating results and financial highlights of the HKMC are attached at the Annex.

Total assets increased by 15.2% from HK$32.2 billion at the end of 2002 to HK$37.1 billion. Despite the difficult market environment, the HKMC purchased HK$6.6 billion of mortgage loans in the first six months and plans to purchase a total of HK$15 billion of mortgage loans in 2003.

On the funding side, the HKMC raised over HK$6 billion through 37 issues of debt securities in the first half of 2003. This has further consolidated the position of the HKMC as the most active corporate issuer of Hong Kong dollar fixed rate debts. As at 30 June 2003, the HKMC had 106 issues of debt securities with a total amount of about HK$33.3 billion outstanding.

The Mortgage Insurance Programme (MIP) maintained steady business volume in the first six months of 2003. Up to the end of June, the Corporation received 4,741 applications, involving a total mortgage loan amount of HK$7.4 billion. Total insured loan amount drawn down is HK$3 billion. The penetration ratio of MIP mortgages showed a significant increase from 9% in 2002 to about 14% in the first half of 2003. Secondary market transactions account for 44% of the applications received in the period. This shows that the MIP has helped to enhance the liquidity of secondary property market transactions.

Reflecting the prudent purchasing and insurance underwriting criteria adopted by the HKMC, the delinquency ratios of loans overdue for more than 90 days in the retained mortgage portfolio and MIP portfolio were 0.36% (a provisional figure) and 0.3% respectively at the end of May, substantially lower than the banking industry average of 1.16%.

The HKMC expects improvement in profits in the second half of 2003 due to the significant increase in mortgage purchase and further improvements in its cost-to-income ratio.

 

The Hong Kong Mortgage Corporation Limited
30 July 2003

 

Annex

 

THE HONG KONG MORTGAGE CORPORATION LIMITED

(Incorporated in Hong Kong with limited liability under the Companies Ordinance)

 

CONSOLIDATED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2003

 

The Hong Kong Mortgage Corporation Limited (HKMC) is pleased to announce the unaudited consolidated half-year financial results for the six months ended 30 June 2003 as follows:


 

Unaudited 6 months ended

 

Unaudited & restated 6 months ended

 

 

30 June 2003

 

30 June 2002

 

 

HK$'000

 

HK$'000

 

 

 

 

 

Interest income

 

505,192

 

411,099

 

 

 

 

 

Interest expense

 

(234,109)

 

(225,681)

 

 

 

 

 

Net interest income

 

271,083

 

185,418

 

 

 

 

 

Other income, net

 

26,633

 

25,257

 

 

 

 

 

Operating income

 

297,716

 

210,675

 

 

 

 

 

Operating expenses

 

(55,068)

 

(52,483)

 

 

 

 

 

Operating profit before provisions

 

242,648

 

158,192

 

 

 

 

 

Provisions for bad and doubtful loans

 

(78,522)

 

(28,413)

 

 

 

 

 

Profit before taxation

 

164,126

 

129,779

 

 

 

 

 

Taxation

 

(13,180)

 

(13,102)

 

 

 

 

 

Net profit for the period

 

150,946

 

116,677 #

 

 

 

 

 


 

Unaudited

at

 

Audited & restated at

 

 

30 June 2003

 

31 December 2002

 

 

HK$'000

 

HK$'000

 

 

 

 

 

Mortgage portfolio, net

 

32,018,413

 

28,257,727

 

 

 

 

 

Cash and short-term funds

 

1,181,619

 

212,863

 

 

 

 

 

Investment in debt securities

 

3,380,044

 

3,244,520

 

 

 

 

 

Total assets

 

37,145,990

 

32,191,033 #

 

 

 

 

 

Debt securities

 

33,339,750

 

28,615,000

 

 

 

 

 

Shareholder's equity

 

3,269,726

 

 

3,118,780 #

Capital-to-assets ratio

 

8.2%

 

8.9%

 

 

 

 

 

 

 

Unaudited
at
30 June 2003

 

Unaudited & restated at
30 June 2002

 

 

 

 

 

Return on shareholder's equity (annualized)

Return on total assets (annualized)

 

9.4%

0.8%

 

8.0% #

0.9%

 

 

 

 

 

Cost-to-income ratio

 

18.5%

 

24.9%

# Figures restated as a result of the adoption of the new Statement of Standard Accounting Practice 12: Income Taxes

 

Financial Review

The unaudited consolidated profit after tax (PAT) was HK$150.9 million for the six months ended 30 June 2003, an increase of HK$34.2 million or 29.3% over the corresponding period of last year. The increase in PAT mainly reflected an increase of HK$85.7 million in net interest income from an enlarged retained mortgage portfolio, which had been moderated by an increase in loan provisions. General provision of HK$10.5 million (1H 2002: HK$10.6 million) and specific provision of HK$68 million (1H 2002: HK$17.8 million) were charged to the profit and loss account for the first half of 2003.

The increase in provisioning reflects the increase of 58% in the size of the retained mortgage portfolio from HK$20.3 billion as at 30 June 2002 to HK$32 billion as at 30 June 2003 and the fall in property prices since June 2002.

The HKMC incurred interest expense of HK$234.1 million (1H 2002: HK$225.7 million). During the period, the HKMC issued a total amount of over HK$6 billion of debts and successfully achieved a low funding cost to fund the mortgage purchase and refinance the matured notes.

The Mortgage Insurance Programme (MIP) continued to be well received by the homebuyers. The total outstanding principal balance of the loans with mortgage insurance coverage amounted to HK$22.6 billion and the number of insured mortgage loans stood at 12,482 as at 30 June 2003. The net premium earned was HK$19.3 million in the first half of 2003 (1H 2002: HK$17.1 million).

The HKMC continues to exercise tight control over its operating expenses. Total operating expenses were HK$55.1 million for the first half of 2003 (1H 2002: HK$52.5 million). The cost-to-income ratio has improved further to 18.5% (1H 2002: 24.9%).

The capital-to-assets ratio (CAR) of the HKMC was maintained at 8.2% as at 30 June 2003 (31 December 2002: 8.9%). This is comfortably above the minimum CAR of 5% stipulated in the guidelines issued by the Financial Secretary. Computing in accordance with the provisions in the Banking Ordinance, the CAR of the HKMC was 15.5%.

Last revision date: 1 August 2011
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