The Hong Kong Mortgage Corporation Limited (HKMC) today (22 May) announced the highlights of its audited consolidated financial results for 2022 as follows:
2022 Financial Results Highlights
The audited loss after tax of the HKMC was HK$319 million (2021: profit after tax of HK$831 million). The accounting loss was primarily due to (a) lower investment income of the annuity business generated from its placements with the Exchange Fund; and (b) a foreign exchange loss arising from strategic offshore Renminbi exposures in cash and debt investments amid uncontrollable market conditions. Such losses were partly offset by the increase in amortisation of net premium receipts from the mortgage insurance business amid significant growth in prior years, together with the drop in upfront commission expenses along with the decrease in the mortgage insurance business in 2022.
After excluding the accounting loss of HKMC Annuity Limited (HKMCA), a wholly-owned subsidiary of the HKMC, and adjusting the amortisation impact of upfront commission expenses for new mortgage insurance policies underwritten to match with the corresponding mortgage insurance premium income being recognised over the life of respective loans, the adjusted profit after tax, return on equity and cost-to-income ratio for 2022 would be HK$680 million, 5.3% and 30.8% respectively (2021: HK$868 million, 7.3% and 25.2% respectively).
Despite the reported accounting loss of the HKMCA, the embedded value of the annuity business as at 31 December 2022 was about HK$11.2 billion indicating that the annuity business should be sustainable in the long term. The embedded value comprised HK$8.9 billion of total equity and HK$2.3 billion of present value of future profits, and the total equity included a capital injection of HK$2.5 billion during the year.
The Capital Adequacy Ratio (CAR) of the HKMC remained solid at 27.9% as at 31 December 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 operating annuity business were about 11 times and 15 times respectively as at 31 December 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 both local and international investor communities in debt issuance activities to satisfy refinancing needs and accumulate cost-effective pre-funding to support sizable loan purchases. With strong financing capability and liquidity position, the HKMC remains resilient and stands ready to face any financial turbulence ahead in fulfilling its core missions and social objectives.
2022 Business Performance Highlights
Asset Purchase
Debt Issuance
Mortgage Insurance Programme (MIP)
SME Financing Guarantee Scheme
Reverse Mortgage Programme
HKMC Annuity Plan
100% Personal Loan Guarantee Scheme
Further details of the HKMC’s consolidated financial results and financial review for 2022 are set out at Annex.
The Hong Kong Mortgage Corporation Limited
22 May 2023