HKMC profit falls to $9m in 1H 2023

It is due to a decrease in property prices affecting the reverse mortgage business.

The Hong Kong Mortgage Corporation Limited (HKMC) reported an unaudited profit after tax of $9m for the first half of 2024, down from $1,175m in 1H 2023.

The drop is primarily due to a decrease in property prices affecting the reverse mortgage business, in contrast to last year’s property price rebound.

When excluding the results of its subsidiary, HKMC Annuity Limited (HKMCA), and adjusting for property price impacts, the adjusted profit after tax for 1H 2024 would be $468m, with an annualised return on equity of 6.2% and a cost-to-income ratio of 22.4%. In 1H 2023, these figures were $365m, 5.2%, and 26.6%, respectively.

Despite reporting an accounting loss for the HKMCA, the embedded value of the annuity business as of 30 June, was approximately $14b. This value comprises $11.3b in total equity and $2.7b in the present value of future profits.

The HKMC maintained a capital adequacy ratio of 20.7%, well above the 8% minimum requirement. The solvency ratios for HKMC Insurance Limited (HKMCI) and HKMCA were approximately 22 times and 16 times, respectively, exceeding the minimum regulatory requirements.

In response to uncertain market conditions, HKMC is pursuing a cautious funding strategy and engaging with investors for debt issuance to support loan purchases and refinancing needs.