The Hong Kong Mortgage Corporation Limited (HKMC) announced today (Friday) its half-year financial results for 2006.
The HKMC and its subsidiaries (the HKMC Group) reported an unaudited profit after tax (PAT) of HK$323.9 million for the six months ended 30 June 2006 (1H 2006), representing a slight decrease of HK$14.2 million or 4.2% from the first six months in 2005 (1H 2005). The shareholders' equity increased by HK$90.8 million to HK$4.8 billion and the annualised return on average shareholders' equity was 13.5% (1H 2005: 15.6%). The cost-to-income ratio was 13.3% (1H 2005: 13.2%). The capital-to-assets ratio remained strong at 13.2% at 30 June 2006. The financial results of the HKMC Group are at the Annex.
The HKMC purchased HK$400 million of mortgages in 1H 2006. While the banks do not have strong incentive to offload sizable mortgage portfolio given the abundant liquidity in the market, the market response to the HKMC's efforts to diversify its purchase opportunities has been positive. The Corporation expects asset acquisition to pick up in the second half of the year. Taking into account the repayment and run-off due to competitive refinancing in the mortgage market, the outstanding principal balance of the mortgage portfolio decreased by 10.4% from HK$33.6 billion at the end of 2005 to HK$30.1 billion as at 30 June 2006.
The HKMC raised HK$8.8 billion through 32 debt issues in the first six months of 2006 and remained the most active corporate issuer in the Hong Kong dollar debt market. As at 30 June 2006, the total value of outstanding debt securities was about HK$26.2 billion.
As for the Mortgage Insurance Programme (MIP), the HKMC received 5,778 applications during the period, involving a total mortgage loan amount of HK$12 billion. The penetration ratio of MIP mortgages was about 14.3% in the first five months of 2006. The slowdown was due to the state of the property market and the prolonged interest rate hike environment. Secondary market transactions accounted for 90% of the applications received in the period. This shows that the MIP has helped to enhance the liquidity of the secondary property market. The total outstanding principal balance of the loans with mortgage insurance coverage amounted to HK$41 billion and the number of insured mortgage loans stood at 23,607 as at 30 June 2006.
Reflecting the prudent purchasing and insurance underwriting criteria adopted by the HKMC, the combined delinquency and rescheduled loans ratio of the mortgage portfolio was 0.37% (a provisional figure) at the end of May (cf. banking industry average at 0.53%).
For the rest of 2006, 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 2006