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Press Releases

The Hong Kong Mortgage Corporation Limited Half-year Financial Results for 2005

The Hong Kong Mortgage Corporation Limited (HKMC) announced today (Thursday) its half-year financial results for 2005.

The unaudited interim results show that the profit after tax (PAT) for the six months ended 30 June 2005 (1H 2005) was HK$338.1 million, a fall of 4.8% or HK$17.2 million below that of the first six months in 2004 (1H 2004). The shareholders' equity increased by HK$159.1 million to HK$4.3 billion. The annualised return on average shareholders' equity was 15.6% (1H 2004: 19.1%). The cost-to-income ratio increased to 13.1% (1H 2004: 11%). The capital-to-assets ratio remained strong at 11.5% at 30 June 2005 (or 23.8% when computed in accordance with the provisions in the Banking Ordinance). The financial results of the HKMC are at the Annex.

In overall terms, the market environment for 1H 2005 was much more challenging than for 1H 2004 when the Corporation was able to make substantial mortgage loan purchases, arrange early pre-funding of its liquidity needs early in the interest rate hike cycle and benefit from an exceptionally wide Prime-HIBOR spread.

For 1H 2005, while the local economy and the property market have both seen strong recovery, the market environment for the purchase of sizeable mortgage loan portfolios remained challenging. The HKMC's purchase of mortgage loans in 1H 2005 amounted to HK$0.9 billion. The HKMC will continue to seek to diversify its purchase opportunities. As there was also a high mortgage prepayment rate, the outstanding principal balance of the HKMC's retained mortgage portfolio decreased by 9.7% from HK$34.9 billion at the end of 2004 to HK$31.5 billion as at 30 June 2005. Total assets decreased by 10.4% from HK$45.3 billion to HK$40.6 billion.

The HKMC raised HK$2.6 billion through 15 debt issues in the first six months of 2005. The funds raised were used for mortgage purchase and redemption of matured debts. As at 30 June 2005, the total value of outstanding debt securities was about HK$30.5 billion.

The Mortgage Insurance Programme (MIP) recorded a significant business growth in the first six months of 2005 due to the rebound of the property market. During the period, the Corporation received 13,095 applications, involving a total mortgage loan amount of HK$27 billion. The penetration ratio of MIP mortgages was about 20.6% in the first five months of 2005. Secondary market transactions accounted for 92% of the applications received in the period. This shows that the MIP has helped to enhance the liquidity of the secondary property market.

Reflecting the prudent purchasing and insurance underwriting criteria adopted by the HKMC, the delinquency ratio of loans overdue for more than 90 days in the mortgage portfolio was 0.29% (a provisional figure) at the end of May (cf. banking industry average at 0.24%).

For the rest of 2005, the HKMC will strive to meet its business targets and continue to meet the needs of the banking sector and the homeowners, and promote the development of the debt market.

The Hong Kong Mortgage Corporation Limited
28 July 2005

Annex (MS Word, 69KB)

Last revision date: 1 August 2011
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