The Hong Kong Mortgage Corporation Limited (HKMC) today (29 September) announced the highlights of its unaudited consolidated financial results for the first six months of 2022 (1H 2022) noted below.
2022 Half-Year Unaudited Financial Results Highlights
The unaudited loss after tax of the HKMC for 1H 2022 was HK$362 million (1H 2021: loss of HK$24 million). The increase in accounting loss was primarily due to the accounting loss of HKMC Annuity Limited (HKMCA), a wholly-owned subsidiary of the HKMC, arising mainly from the provisions made for its placements with the Exchange Fund amid uncertain and volatile market conditions, partly offset by the increase in amortisation of net premium receipts from the significant growth in the mortgage insurance business in prior years.
After excluding the accounting loss of the HKMCA and adjusting the amortisation impact of upfront commissions expenses for new mortgage insurance policies underwritten to match the corresponding mortgage insurance premium income being recognised over the life of the respective loans, the adjusted profit after tax, annualised return on equity and cost-to-income ratio for 1H 2022 would be HK$463 million, 7.3% and 24.0% respectively.
Despite the reported accounting loss of the HKMCA, the embedded value of the annuity business as at 30 June 2022 was about HK$11.0 billion, which comprised HK$9.0 billion of total equity and HK$2.0 billion of present value of future profits. This indicates that the annuity business should be sustainable in the long term.
The Capital Adequacy Ratio (CAR) of the HKMC remained solid at 19.1% as at 30 June 2022 (31 December 2021: 23.4%), well above the minimum ratio of 8% stipulated by the Financial Secretary. The solvency ratios of HKMC Insurance Limited (HKMCI), a wholly-owned subsidiary of the HKMC operating general insurance business, and the HKMCA were about 8 times and 17 times respectively as at 30 June 2022, well above the respective 200% and 150% minimum regulatory requirements stipulated by the Insurance Authority.
Amid uncertain market conditions, the HKMC proactively communicated with the local and international investment community for debt issuance to fulfil its refinancing needs and accumulate cost-effective pre-funding to support its sizable loan purchases. With strong financing capability and liquidity position, the HKMC’s core operations remain resilient and stand ready to face any financial turbulence ahead in performing its strategic policy roles and attaining its social objectives.
2022 Half-Year Business Performance Highlights
Asset Purchase
- Purchased HK$2.6 billion of loan assets (1H 2021: HK$790 million)
- Purchased HK$11.8 billion of loans (1H 2021: HK$20.7 billion) from the Special 100% Loan Guarantee under the SME Financing Guarantee Scheme (SFGS)
- Outstanding principal balance of loan portfolio was HK$86.8 billion as at 30 June 2022 (31 December 2021: HK$79.6 billion)
Debt Issuance
- Issued corporate debts totalling HK$58.1 billion for 1H 2022, of which HK$46.3 billion with tenor of one year or above (1H 2021: totalling HK$60.9 billion, of which HK$42.6 billion with a tenor of one year or above), being the most active corporate debt issuer in the domestic market of Hong Kong dollar and offshore Renminbi corporate bonds
- Outstanding balance of debt securities was HK$138.4 billion as at 30 June 2022 (31 December 2021: HK$115.7 billion)
- Credit ratings of AA+ from S&P Global Ratings and Aa3 from Moody’s, same as those of the HKSAR Government
Mortgage Insurance Programme (MIP)
- New MIP loans drawn down amounted to HK$50.7 billion (1H 2021: HK$60.6 billion)
- 87% of loans drawn down (in terms of loan amount) were secured on properties in the secondary market, demonstrating the importance of the MIP to homebuyers in the secondary market
SME Financing Guarantee Scheme
- In respect of the 80% Guarantee Product launched in May 2012, as at the end of June 2022, approved more than 22,300 applications with a total loan amount of HK$97.7 billion since its launch
- In respect of the 90% Guarantee Product launched in December 2019, as at the end of June 2022, approved more than 6,900 applications with a total loan amount of HK$13.3 billion since its launch
- In respect of the Special 100% Loan Guarantee launched in April 2020, as at the end of June 2022, approved more than 51,700 applications with a total loan amount of HK$94.5 billion since its launch, of which HK$92.4 billion of loan assets were purchased by the HKMC
- As at the end of June 2022, the 80% and 90% Guarantee Products and the Special 100% Loan Guarantee had benefitted more than 49,000 local small and medium-sized enterprises and 684,000 related employees since their inception
Reverse Mortgage Programme
- Approved 323 applications (1H 2021: 359 applications), with an average property value of HK$6.6 million and an average monthly payout of HK$23,000
HKMC Annuity Plan
- Issued 1,727 policies (1H 2021: 1,654 policies), with total premiums received of around HK$1.2 billion (1H 2021: HK$1.6 billion) and an average premium of HK$703,000 (1H 2021: HK$952,000)
100% Personal Loan Guarantee Scheme (PLGS)
- As at the end of June 2022, approved around 50,000 applications with a total loan amount of HK$3.4 billion since its launch in April 2021
- A measure to support any individual landlord who lives off rental income but has been affected by the rental enforcement moratorium under the Temporary Protection Measures for Business Tenants (COVID-19 Pandemic) Ordinance, an interest-free loan amount equivalent to three times the monthly rent, subject to a ceiling of HK$100,000, is offered under the PLGS. The application period is from 6 May 2022 to 31 October 2022. As at the end of June 2022, 3 applications were received from affected landlords for a total loan amount of HK$160,000
Further details of the HKMC’s unaudited consolidated financial results and financial review for 1H 2022 are set out at the Annex.
The Hong Kong Mortgage Corporation Limited
29 September 2022
