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Timothy Morano Oct 07, 2024 07:25
The Hong Kong Mortgage Corporation Limited (HKMC) announces a notable drop in profit for H1 2024, attributing the decline to adverse property price impacts on its reverse mortgage business.
The Hong Kong Mortgage Corporation Limited (HKMC) has released its unaudited financial results for the first half of 2024, revealing a sharp decrease in profit, as reported by the Hong Kong Monetary Authority. The HKMC's profit after tax for this period was HK$9 million, a substantial decline from HK$1,175 million in the first half of 2023. This downturn is primarily attributed to a drop in property prices, which adversely affected the reverse mortgage business, contrasting with the previous year's favorable conditions.
Financial Performance and Adjustments
Excluding certain variables, such as the results of HKMC Annuity Limited and the impact of property price changes, the adjusted profit after tax was HK$468 million, with an annualized return on equity of 6.2% and a cost-to-income ratio of 22.4%. These figures show an improvement compared to the previous year's adjusted profit of HK$365 million, a 5.2% return on equity, and a 26.6% cost-to-income ratio.
Despite reporting an accounting loss, the annuity business's embedded value stood at approximately HK$14 billion as of June 30, 2024, indicating a robust financial position. The Capital Adequacy Ratio (CAR) of the HKMC was a solid 20.7%, exceeding the minimum requirement of 8% set by the Financial Secretary. The solvency ratios for HKMC Insurance Limited and HKMC Annuity Limited were also well above regulatory requirements.
Business Activities and Market Engagement
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. The outstanding balance of the loan portfolio was HK$107.1 billion as of June 30, 2024.
HKMC was the most active issuer in the Hong Kong dollar corporate bond market, issuing HK$57.1 billion in corporate debts, including a record-breaking HK$12 billion in triple-tranche HKD bonds. The institution maintained strong credit ratings of AA+ and Aa3 from S&P Global Ratings and Moody’s, respectively.
Mortgage and Loan Guarantee Programs
The Mortgage Insurance Programme drew down HK$28.3 billion in new loans, with a significant portion secured on secondary market properties. The SME Financing Guarantee Scheme saw over 66,900 applications approved, totaling approximately HK$143.2 billion in loans since its inception.
The Dedicated 100% Loan Guarantee Schemes, launched in 2023, approved 220 applications with a total loan amount of HK$218.2 million by mid-2024. The Reverse Mortgage Programme also saw increased activity, with 546 applications approved, up from 277 in the first half of 2023.
HKMC continues to demonstrate resilience in its core operations amid market uncertainties, supported by a prudent prefunding strategy and proactive communication with investment communities. For more detailed information, the full financial report is available on the Hong Kong Monetary Authority website.
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