Timothy Morano
October 7, 2024 07:25
Hong Kong Mortgage Corporation Limited (HKMC) has announced a notable decline in profits for the first half of 2024. This is because it has a negative impact on real estate prices for reverse mortgage businesses.
Hong Kong Mortgage Corporation Limited (HKMC) has released its unaudited financial results for the first half of 2024, showing a sharp decline in profits, as reported by the Hong Kong Monetary Authority. HKMC’s after-tax profit during the period was HK$9 million, compared to HK$1.175 billion in the first half of 2023. This downturn was primarily due to falling real estate prices, which had a negative impact on our reverse mortgage business. Favorable conditions in previous years.
Financial Performance and Reconciliation
Excluding certain variables such as HKMC Annuity Limited’s results and the impact of property price fluctuations, adjusted profit after tax was HK$468 million, with an annual return on equity of 6.2% and a cost-to-income ratio of 22.4%. . These figures represent an improvement on the previous year’s adjusted profit of HK$365 million, return on equity of 5.2% and cost-to-income ratio of 26.6%.
Despite reporting accounting losses, the intrinsic value of the pension business was approximately HK$14 billion as of June 30, 2024, indicating a strong financial position. HKMC’s capital adequacy ratio (CAR) of 20.7% exceeded the minimum requirement of 8% set by the Finance Minister. The solvency ratios of HKMC Insurance Limited and HKMC Annuity Limited were also well above regulatory requirements.
Business activities and market participation
In the first half of 2024, HKMC acquired HK$2.1 billion in loan assets and purchased HK$4.6 billion in loans under the SME Financing Guarantee Scheme. As of June 30, 2024, the outstanding balance of the loan portfolio was HK$107.1 billion.
HKMC was the most active issuer in the Hong Kong dollar corporate bond market, issuing HK$57.1 billion of corporate bonds, including a record HK$12 billion of triple tranche HKD bonds. The agency has maintained strong credit ratings of AA+ and Aa3 from S&P Global Ratings and Moody’s, respectively.
Mortgage and Loan Guarantee Program
The mortgage insurance program attracted HK$28.3 billion in new loans, a significant portion secured in secondary market properties. More than 66,900 applications have been approved for the SME Financial Guarantee Scheme, with total lending amounting to approximately HK$143.2 billion since its introduction.
The dedicated 100% loan guarantee scheme, which launched in 2023, has approved 220 applications by mid-2024 with a total loan amount of HK$218.2 million. The Reverse Mortgage Program also saw an increase in activity, with 546 applications approved, up from 277 in the first half of 2023.
HKMC continues to demonstrate the resilience of its core operations amid market uncertainty through a prudent pre-funding strategy and active communication with the investment community. For more information, see the full financial report on the Hong Kong Monetary Authority website.
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