Further details of the HKMC’s consolidated financial results and financial review for 2022 are set out at Annex.

2022 Financial Results Highlights

The audited loss after tax of the HKMC was HK$319 million (2021: profit after tax of HK$831 million).  The accounting loss was primarily due to (a) lower investment income of the annuity business generated from its placements with the Exchange Fund; and (b) a foreign exchange loss arising from strategic offshore Renminbi exposures in cash and debt investments amid uncontrollable market conditions.  Such losses were partly offset by the increase in amortisation of net premium receipts from the mortgage insurance business amid significant growth in prior years, together with the drop in upfront commission expenses along with the decrease in the mortgage insurance business in 2022.

After excluding the accounting loss of HKMC Annuity Limited (HKMCA), a wholly-owned subsidiary of the HKMC, and adjusting the amortisation impact of upfront commission expenses for new mortgage insurance policies underwritten to match with the corresponding mortgage insurance premium income being recognised over the life of respective loans, the adjusted profit after tax, return on equity and cost-to-income ratio for 2022 would be HK$680 million, 5.3% and 30.8% respectively (2021: HK$868 million, 7.3% and 25.2% respectively).

Despite the reported accounting loss of the HKMCA, the embedded value of the annuity business as at 31 December 2022 was about HK$11.2 billion indicating that the annuity business should be sustainable in the long term.  The embedded value comprised HK$8.9 billion of total equity and HK$2.3 billion of present value of future profits, and the total equity included a capital injection of HK$2.5 billion during the year.

The Capital Adequacy Ratio (CAR) of the HKMC remained solid at 27.9% as at 31 December 2022 (31 December 2021: 23.4%), well above the minimum ratio of 8% stipulated by the Financial Secretary.  The solvency ratios of HKMC Insurance Limited (HKMCI), a wholly-owned subsidiary of the HKMC operating general insurance business, and the HKMCA operating annuity business were about 11 times and 15 times respectively as at 31 December 2022, well above the respective 200% and 150% minimum regulatory requirements stipulated by the Insurance Authority.

Amid uncertain market conditions, the HKMC proactively communicated with both local and international investor communities in debt issuance activities to satisfy refinancing needs and accumulate cost-effective pre-funding to support sizable loan purchases.  With strong financing capability and liquidity position, the HKMC remains resilient and stands ready to face any financial turbulence ahead in fulfilling its core missions and social objectives.

2022 Business Performance Highlights

Asset Purchase

• Purchased HK$4.3 billion of loan assets (2021: HK$3.1 billion)
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• Purchased HK$33.4 billion of loans (2021: HK$42.9 billion) from the Special 100% Loan Guarantee under the SME Financing Guarantee Scheme (SFGS)
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• Outstanding principal balance of loan portfolio was HK$101.6 billion as at 31 December 2022 (31 December 2021: HK$79.6 billion)
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Debt Issuance

• Issued corporate debts totalling HK$97.6 billion, of which HK$71.8 billion with a tenor of one year or above (2021: totalling HK$109.5 billion, of which HK$84.2 billion with a tenor of one year or above), being the most active issuer in the domestic market of Hong Kong dollar (HKD) and offshore Renminbi (CNH) corporate bonds
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• It included the inaugural dual-tranche issuance of HK$8 billion 2-year and CNH 3 billion 3-year social bonds pursuant to the Social, Green and Sustainability Financing Framework established during the year, being the world’s first social bond issuance in dual-tranche denominated in HKD and CNH
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• Outstanding balance of debt securities issued was HK$131.1 billion as at 31 December 2022 (31 December 2021: HK$115.7 billion)
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• Credit ratings of AA+ from S&P Global Ratings and Aa3 from Moody’s, same as those of the HKSAR Government
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Mortgage Insurance Programme (MIP)

• New MIP loans drawn down amounted to HK$107.2 billion (2021: HK$132.6 billion)
• 81% of loans drawn down (in terms of loan amount) were secured on properties in the secondary market, demonstrating the importance of the MIP to homebuyers in the secondary market
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SME Financing Guarantee Scheme

• In respect of the 80% Guarantee Product, as at the end of 2022, approved more than 23,300 applications with a total loan amount of approximately HK$102.4 billion since its launch in May 2012
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• In respect of the 90% Guarantee Product, as at the end of 2022, approved more than 7,900 applications with a total loan amount of approximately HK$15.3 billion since its launch in December 2019
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• In respect of the Special 100% Loan Guarantee, as at the end of 2022, approved more than 58,500 applications with a total loan amount of approximately HK$115.2 billion since its launch in April 2020, of which HK$114.0 billion of loan assets were purchased by the HKMC
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• As at the end of 2022, the 80% and 90% Guarantee Products and the Special 100% Loan Guarantee had benefitted more than 53,000 local small and medium-sized enterprises and 715,000 related employees since their inception
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Reverse Mortgage Programme

• Approved 938 applications (2021: 786 applications), with an average property value of HK$6.7 million and an average monthly payout of HK$22,400
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HKMC Annuity Plan

• Issued 3,254 policies (2021: 4,059 policies), with total premium received of around HK$2.5 billion (2021: HK$3 billion) and an average premium of HK$777,000 (2021: HK$740,000)
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100% Personal Loan Guarantee Scheme

• As at the end of 2022, approved around 60,700 applications with a total loan amount of approximately HK$4.1 billion since its launch in April 2021