The Mortgage Corporation recorded an unaudited profit after tax of $411.2 million in the first half of this year, up 27% over the same period last year.

The annualised return on shareholders' equity was 15.4%. The net interest margin of the average interest-earning assets remained stable at 1.6%. 

Releasing its half-year financial results today, the corporation said it earned $1.15 billion from interest income, while incurring interest expense of $805.8 million on funding operations. The net interest income was $340.3 million.

Other income rose 114.5% to $185.8 million. Major items included $52.4 million of net mortgage insurance premium earned, $40.6 million of exchange gain, $10.6 million of early prepayment fees arising from refinancing activities and $2.8 million of dividend income on investment securities, and the marked-to-market gain on change in fair value of financial instruments of $80.1 million. 

Property market improves

With the improvement in the property market and pick-up in new loans underwritten, risk-in-force borne by the corporation rose from $2.9 billion at the end of 2006 to $3.2 billion as at June 30. The net mortgage insurance premium earned rose 3.6% to $52.4 million.

Total operating expenses were $58.9 million for the first half of 2007, and the cost-to-income ratio was 11.2%.

As a result of the continuing improvement in the unemployment rate and the borrowers' credit quality, a write-back of loan-impairment allowance of $1.4 million was made in the period.