The Hong Kong Mortgage Corporation Limited (HKMC) made the following announcement today (Tuesday).
Operating in a difficult environment in 2009 against the backdrop of the global financial crisis, the HKMC demonstrated its resilience and ability to perform its strategic roles of (i) enhancing financial stability by providing liquidity to banking sector; (ii) promoting wider home ownership; and (iii) facilitating the further growth and development of the debt market in Hong Kong.
Financial Results for 2009
The Corporation achieved good financial results in 2009. Profit after tax amounted to HK$1,006 million in 2009, recording a year-on-year growth of 66.3%. Return on shareholders' equity (ROE) was 16.2% (2008: 10.5%). The increase in profits and ROE in 2009 was mainly attributable to the full-year effect of the significant loan purchases made in response to banks' liquidity needs during the global financial crisis, the favourable interest rate environment and excellent loan quality.
The capital-to-assets ratio remained strong at 9.5% (2008: 8.7%), well above the minimum requirement of 5% stipulated by the Financial Secretary. The cost-to-income ratio was 12.4% for 2009 (2008: 17.5%). The financial results of the HKMC Group are at Annex A.
A final dividend of HK$500 million or HK$0.25 per share, was declared, representing a dividend payout ratio of 49.7% for the year.
Business Performance
The total asset purchase in 2009 was HK$8.8 billion, including HK$5.7 billion of mortgage loans in Hong Kong and HK$3.1 billion of overseas mortgage loans. The role of the HKMC as liquidity provider to the Hong Kong banking sector was especially prominent during the "rainy days" of the recent global financial crisis. Taking into account loan repayments and prepayments during the year, the outstanding principal balance of the loan portfolio was HK$43.8 billion on 31 December 2009 (2008: HK$50.8 billion).
In 2009, the HKMC's Mortgage Insurance Programme (MIP) continued to provide an effective channel for promoting wider home ownership in Hong Kong, benefiting first-time homebuyers in particular. Mortgage insurance coverage for newly originated mortgage loans reached a record high of HK$36 billion in 2009 and the usage rate (in terms of the amount of loans drawn down as a percentage of the total market mortgage drawdown) increased to 18% (2008: 11%). The Corporation refined the MIP's Risk-based Pricing Scheme in December 2009 so that a greater number of borrowers can be eligible for premium discounts and the range of premium discounts has been widened as well. As 90% of the drawdown in 2009 was on properties in the secondary market, this demonstrated again the importance of the MIP in helping homebuyers in the secondary market.
Attributable to the Corporation's solid credit ratings as well as investors' flight-to-quality investment approach, the HKMC issued a total of HK$22.7 billion corporate debts in 2009 and remained the most active corporate debt issuer in the Hong Kong dollar market for the ninth consecutive year. In particular, the Corporation issued the HK$1 billion 15-year callable zero coupon bond, the largest-ever in the local bond market, to meet the growing investment needs of insurance companies and pension funds, and made its debut public benchmark issuance of US$500 million fixed rate notes to further broaden its investor base and funding source. On 31 December 2009, the total amount of outstanding debt securities and mortgage-backed securities issued were HK$44.5 billion and HK$2 billion respectively.
The Corporation maintains its excellent credit ratings of AA+ from Standard & Poor's and Aa2 from Moody's, same as the ratings of the HKSAR Government.
Outlook
While the economy is gradually recovering from the global financial crisis, the prospect of a double dip recession cannot be ruled out. The Corporation will continue to play its critical role as liquidity provider to promote banking and financial stability in Hong Kong. It will also continue to promote home ownership for Hong Kong families through enhancement of its MIP to better serve the homebuyers and the banking sector.
Furthermore, the Corporation will strive to develop new mortgage products in Hong Kong to complement Government initiatives and meet the needs of society. It will also keep on contributing to the development of debt and securitisation markets through regular issuance and product innovation.
"The Corporation will continue to fulfil its core objectives and strengthen its strategic roles in Hong Kong. It will strive to help further develop the Hong Kong housing-finance system, invest in product innovation, and make mortgage financing more accessible to homebuyers," said Mr John C Tsang, Chairman of the HKMC.
Appointment of Board of Directors
The HKMC held its 13th Annual General Meeting today. Eleven directors have been re-appointed by the Financial Secretary for another term - Professor K C Chan, Mr Chan Kin-por, Ms Tanya Chan, Ms Eva Cheng, Professor Anthony Cheung, Mr Eddy Fong, Mr Lester Huang, Ms Starry Lee, Mr Andrew Leung, Dr David Li and Mr Abraham Shek. Three new Directors have been appointed by the Financial Secretary - Mr Jammy Chen, Mr Andrew Fung and Mr Ryan Fung. The new appointments have been made to replace Ms Louisa Cheang, Mr Geoffrey Mansfield and Mr Eddie Tan who had not offered themselves for re-appointment. The composition of the new Board of Directors is at Annex B.
"On behalf of the Board, I would like to thank the outgoing Directors for having generously contributed their time and professional skills to assist in the efficient management of the Corporation. I would also like to welcome the new Directors, and look forward to their support in furthering the development of the business of the Corporation," said Mr Tsang.
According to the Articles of Association of the Corporation, at each Annual General Meeting all those Directors who are not Executive Directors shall retire but shall be eligible for re-appointment. Hence, the term of office of these Directors will run until the next Annual General Meeting to be held around April 2011.
Annex A & B
The Hong Kong Mortgage Corporation Limited
20 April 2010
