Solid foundation: Mortgage Corporation Chief Executive Officer James Lau (right) announces the corporation's $355.3 million in earnings for the first half of 2004, up $204.4 million, or 135.5%, on the same period last year.

The Mortgage Corporation's profit after tax for the six months ended June 30 was $355.3 million, up $204.4 million, or 135.5%, on the same period last year.

The corporation's unaudited interim results showed shareholders' equity rose $355.3 million to $3.9 billion. The annualised return on average shareholder equity rose to 19.1%, compared to 9.4% in the first half of last year.

The cost-to-income ratio improved to 11%, over last year's 18.5% figure.

The capital-to-assets ratio remained strong at 8.2% on June 30 (or 18.8% when computed in accordance with the provisions in the Banking Ordinance).

Total assets rose 26.9% to $51.9 billion from $40.9 billion at the end of last year.

Outstanding balance up 17.6%

Despite the competitive market conditions, the corporation purchased an aggregate of $10.7 billion in mortgage loans in the first six months. As a result, the outstanding principal balance of the retained mortgage portfolio rose from $34.6 billion at the end of last year by 17.6% to $40.7 billion.

On the funding side, the corporation raised more than $11 billion through 37 issues of debt securities and one issue of mortgage-backed securities. This has consolidated its position as the most active corporate issuer in the Hong Kong-dollar debt market.

The corporation has 131 issues of debt securities with a total outstanding amount of about $42 billion.

Business steady

The Mortgage Insurance Programme maintained steady business volume in the first six months of 2004.

The corporation received 6,562 applications, involving a total mortgage loan amount of $12.2 billion. The total insured loan amount drawn down was $5.3 billion.

The penetration ratio of programme mortgages was about 13% in the first quarter. Secondary market transactions accounted for 72% of the applications received. This showed the programme has helped enhance the liquidity of the secondary property market.

Reflecting the prudent purchasing and insurance underwriting criteria adopted by the corporation, the delinquency ratios of loans overdue for more than 90 days in the retained mortgage portfolio and programme portfolio were 0.52% (a provisional figure) and 0.27% at the end of May, lower than the banking industry average of 0.63%.