Hong Kong Mortgage Corporation Reports HK$260 Million Loss for 2023 Amid Market Challenges
Zach Anderson Jun 03, 2024 09:03
Hong Kong Mortgage Corporation Limited (HKMC) announces a HK$260 million loss for 2023, citing market-driven challenges.
HKMC Reports Financial Results for 2023
According to the Hong Kong Monetary Authority (HKMA), the Hong Kong Mortgage Corporation Limited (HKMC) reported a loss of HK$260 million for 2023, a significant reversal from a HK$2,163 million profit in 2022. The loss is attributed to increased insurance contract liabilities in the annuity business and the negative impact of property price drops on the reverse mortgage insurance business.
Adjusted Financial Metrics
Excluding the accounting results of HKMC Annuity Limited (HKMCA) and other specific adjustments, the HKMC's adjusted profit after tax for 2023 stood at HK$724 million, with a return on equity of 5.3% and a cost-to-income ratio of 28.1%. This marks an improvement from the adjusted profit of HK$445 million, a 3.2% return on equity, and a 34.5% cost-to-income ratio in 2022.
Strong Capital Position
The HKMC maintained a robust Capital Adequacy Ratio (CAR) of 21.6% as of December 31, 2023, well above the minimum requirement of 8%. The solvency ratios of HKMCI and HKMCA were approximately 13 times and 18 times, respectively, exceeding the regulatory requirements. The HKMC also received a capital injection of HK$2.5 billion during the year, bolstering the embedded value of its annuity business to about HK$13.9 billion.
Business Performance Highlights
Asset Purchase and Securitisation
- Acquired HK$2.8 billion in loan assets.
- Purchased HK$24.5 billion in loans under various loan guarantee schemes.
- Issued US$404.8 million in infrastructure loan-backed securities.
- Outstanding loan portfolio balance was HK$109.5 billion as of December 31, 2023.
Debt Issuance
- Issued HK$98.3 billion in corporate debts, with HK$89.9 billion having a tenor of one year or more.
- Second social bond issuance of nearly HK$20 billion, marking the largest in Asia.
- Outstanding debt securities balance was HK$161.7 billion.
- Maintained credit ratings of AA+ from S&P Global Ratings and Aa3 from Moody’s.
Mortgage Insurance Programme (MIP)
- New MIP loans drawn down amounted to HK$83.1 billion.
- 71% of loans were secured on properties in the secondary market.
SME Financing Guarantee Scheme
- Approved over 25,400 applications with a total loan amount of HK$111.1 billion for the 80% Guarantee Product.
- Approved over 10,800 applications with a total loan amount of HK$20.3 billion for the 90% Guarantee Product.
- Approved over 65,600 applications with a total loan amount of HK$139.1 billion for the Special 100% Loan Guarantee.
Dedicated 100% Loan Guarantee Schemes
- Approved 204 applications for a total loan amount of about HK$0.2 billion as of December 31, 2023.
- Two applications approved for the Battery Electric Taxis scheme, totalling approximately HK$0.7 million.
Reverse Mortgage Programme
- 797 applications approved, with an average property value of HK$5.4 million and an average monthly payout of HK$14,900.
Annuity Business
- Issued 2,205 policies with total premiums of HK$1.6 billion.
100% Personal Loan Guarantee Scheme (PLGS)
- Around 67,000 applications approved with a total loan amount of about HK$4.7 billion since its launch in April 2021.
Despite the challenges, the HKMC's strong financial position and proactive strategies have enabled it to continue supporting its strategic policy roles and social objectives. Further details of the HKMC’s consolidated financial results and financial review for 2023 are available on the Hong Kong Monetary Authority website.
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