HKMC's Half-Year Financial Results for 2010

The Hong Kong Mortgage Corporation Limited (HKMC) and its subsidiaries (the HKMC Group) are pleased to announce the financial results for the first half of 2010 today (Thursday).

Half-Year Financial Results for 2010

The HKMC recorded an unaudited profit after tax (PAT) of HK$592 million for the six months ended 30 June 2010 (1H 2010), representing a year-on-year increase of 28% (1H 2009: HK$464 million). The annualised return on equity (ROE) was 17.4% (1H 2009: 15.6%). The increase in PAT and ROE was mainly attributable to the favourable interest rate environment, excellent loan quality, and the HKMC's prudent business development strategy and strong commitment to risk management.

The capital-to-assets ratio remained strong at 10.8% as at 30 June 2010, well above the minimum of 5% stipulated by the Financial Secretary. The cost-to-income ratio was 10.7% for 1H 2010 (1H 2009: 11.9%). Details of the HKMC Group's financial results are at Annex.

Business Performance

The HKMC purchased a total of HK$1.5 billion assets in the first half of 2010 (1H 2009: HK$5.2 billion). The outstanding principal balance of the loan portfolio decreased by 12% from HK$43.8 billion at the end of 2009 to HK$38.4 billion on 30 June 2010.

During the first half of 2010, new mortgage loans drawn down under the Mortgage Insurance Programme (MIP) amounted to HK$19 billion (1H 2009: HK$12.7 billion). The usage rate of the MIP (in terms of the amount of loans drawn down as a percentage of the total new mortgage loans drawn down in the market) was 13%. As 94% of the loans drawn down during the period were secured on properties in the secondary market, this demonstrated again the importance of the MIP to homebuyers in the secondary market.

The HKMC issued a total of HK$4.2 billion debts in the first half of 2010, continuing as the most active corporate debt issuer in the Hong Kong dollar debt market. As at 30 June 2010, the total amount of outstanding debt securities and mortgage-backed securities issued were HK$38.8 billion and HK$1.7 billion respectively.

The HKMC maintains its excellent credit ratings of AA+ from Standard & Poor's and Aa2 from Moody's, same as the ratings of the HKSAR Government.

The Hong Kong Mortgage Corporation Limited
16 September 2010