The following is issued on behalf of the Hong Kong Monetary Authority:

Hong Kong Mortgage Corporation Releases 2008 Annual Report

For more information, please contact:
Melissa Ng /David Hsieh at 212-752-3320
Daniel McAtee at 202-238-6360
Wing Yan Tong at 415-835-9315

June 11, 2009 - The Hong Kong Mortgage Corporation Limited (HKMC) published its Annual Report for 2008 today.

“The Hong Kong Mortgage Corporation performed well in 2008 despite the once-in-a-lifetime financial crisis triggered by the U.S. sub-prime mortgage problems. The Corporation has proven to be highly efficient and resilient, carrying out its important policy role of helping to maintain banking stability by purchasing loan assets from local banks. In doing so, the Corporation helps local financial institutions address their liquidity needs and the credit risk arising from their loan portfolios,” said Chairman of the Board of Directors of the HKMC, Mr. John C. Tsang.

The Report highlights the following achievements of the HKMC in 2008:

(a) Record purchase of a total of US$3.33 billion (HK$26 billion) of assets in a year, including US$1.74 billion (HK$13.6 billion) of residential mortgage loans and US$25.6 million (HK$0.2 billion) of non-mortgage assets in Hong Kong as well as the purchase of US$1.56 billion (HK$12.2 billion) of Korean residential mortgage loans structured as mortgage-backed securities;

(b) Drawdown of mortgage insurance coverage for newly originated mortgage loans was a record total of US$2.61 billion (HK$20.4 billion), achieving a market penetration of 16%;

(c) Issuance of a record of US$3.12 billion (HK$24.4 billion) debt securities in a cost-effective manner, maintaining the HKMC’s position as the most active corporate issuer in the Hong Kong dollar debt market for eight consecutive years; and

(d) Safeguarding excellent asset quality, with a combined delinquency ratio (above 90-day ratio and rescheduled loan ratio) of 0.02% for the mortgage insurance portfolio, 0.12% for the Hong Kong residential mortgage portfolio (compared to industry average of 0.19%), and 0.07% across all asset classes as at 31 December 2008.

The Corporation achieved profit after tax of US$77.56 million (HK$605 million) in 2008, with the return on shareholder’s equity of 10.5% and cost-to-income ratio of 17.5%. Its capital-to-assets ratio remained strong at 8.7%, well above the guideline of a minimum 5% stipulated by the Financial Secretary. For the fifth consecutive year, the Corporation declared a final dividend of US$32.05 million (HK$250 million) or US$0.016 (HK$0.125) per share, representing 41.3% of the profit after tax.