HK Mortgage Corporation Reports Significant Profit Decline Amid Property Price Drop in First Half of 2024.

HKMC's financial results highlights for first half of 2024

The Hong Kong Mortgage Corporation Limited (HKMC) today (October 7) announced the highlights of its unaudited consolidated financial results for the first six months of 2024 (1H 2024) noted below.

2024 half-year unaudited financial results highlights

The unaudited profit after tax of the HKMC for 1H 2024 was HK$9 million (1H 2023: HK$1,175 million (Note)). The decline in profitability was primarily due to the unfavourable impact of property price drop in 1H 2024 on the reverse mortgage business as compared to the favourable impact of property price rebound in 1H 2023.

After excluding the accounting results of the HKMC Annuity Limited (HKMCA), a wholly-owned subsidiary of the HKMC operating annuity business, the impact of property price changes on the reverse mortgage insurance business, and the effect of valuation and corresponding adjustments as required by Hong Kong Financial Reporting Standard 17 "Insurance Contracts" (HKFRS 17) at consolidation level in respect of the loan portfolios with insurance cover provided by the HKMC Insurance Limited (HKMCI), another wholly-owned subsidiary of the HKMC operating general insurance business, the adjusted profit after tax, annualised return on equity and cost-to-income ratio for 1H 2024 would be HK$468 million, 6.2 per cent and 22.4 per cent respectively (1H 2023: HK$365 million, 5.2 per cent and 26.6 per cent respectively).

Despite the reported accounting loss of the HKMCA, the embedded value of the annuity business as at June 30, 2024, was about HK$14.0 billion on the basis of the Insurance Ordinance, which comprised HK$11.3 billion of total equity and HK$2.7 billion of present value of future profits. This indicates a sound financial position of the HKMCA to develop its business in the long term.

The capital adequacy ratio of the HKMC remained solid at 20.7 per cent as at June 30, 2024, well above the minimum ratio of eight per cent stipulated by the Financial Secretary. The solvency ratios of the HKMCI and the HKMCA were about 22 times and 16 times respectively as at June 30, 2024, well above the respective 200per cent and 150per cent minimum regulatory requirements stipulated by the Insurance Authority.

Amid uncertain market conditions, the HKMC adopted prudent prefunding strategy and proactively communicated with local and international investment communities for debt issuance to support its sizable loan purchase and fulfil its refinancing needs. With strong financing capability and liquidity position, the HKMC's core operations remain resilient and stand ready to cope with any financial turbulence ahead in performing its strategic policy roles and attaining its social objectives.

2024 half-year business performance highlights

Asset purchase

Debt issuance

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Mortgage Insurance Programme (MIP)

SFGS

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DLGS

Reverse Mortgage Programme

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Annuity business

Further details of the HKMC's unaudited consolidated financial results and financial review for 1H 2024 are set out in the Annex.

Note: After adoption of HKFRS 17 with effect from January 1, 2023, accounting adjustments are required to be made at consolidation level in respect of the loan portfolios with insurance cover provided by the HKMCI. The Group has finalised the accounting adjustments when the 2023 audited financial statements were prepared. Accordingly, the comparative figures reported in this press release have been restated with the same accounting treatment applied consistently.

LegCo delegation begins duty visit to Japan

The following is issued on behalf of the Legislative Council Secretariat:

The Legislative Council (LegCo) delegation (the delegation), led by the President of LegCo, Mr Andrew Leung, began a four-day duty visit in Japan today (December 21) to strengthen ties with Japan and gain a deeper understanding of the latest situations and opportunities of the country in the areas of trade, culture and tourism, fisheries and agriculture, and food safety.

Upon arrival in Tokyo, the delegation had dinner and exchanged views with representatives of the Hong Kong Economic and Trade Office in Tokyo. Members and the Principal Hong Kong Economic and Trade Representative (Tokyo), Miss Winsome Au, discussed issues such as fostering the bilateral economic and trade relations between Hong Kong and Japan, attracting investment, and promoting Hong Kong tourism. Members also gained insight into the latest developments of Japanese culture, and explored the opportunities for collaboration between Hong Kong and Japan’s cultural industries. Mr Leung expressed gratitude to the Hong Kong Economic and Trade Office in Tokyo for their assistance in facilitating this duty visit.

The delegation will continue their duty visit in Japan tomorrow (December 22).

The delegation is led by Mr Leung. The Deputy delegation leader is the Chairman of the Parliamentary Liaison Subcommittee, Mr Tommy Cheung. Other participating Subcommittee members are Mr Jeffrey Lam, Mr Dominic Lee, Ms Nixie Lam, Ms Joephy Chan, Mr Tang Fei and Mr Yim Kong.

LegCo delegation begins duty visit to Japan Source: HKSAR Government Press Releases