*********************************************

    The Hong Kong Mortgage Corporation Limited (HKMC) made the following announcement today (April 12):

Financial Results for 2004

    Based on the audited consolidated financial results of the HKMC for 2004, the profit after tax (PAT) of the Corporation was HK$664.0 million, which was HK$284.9 million or 75.2% higher than that of 2003.  Return on shareholders' equity was 17.1% (2003: 11.5%).  The capital-to-assets ratio (CAR) remained strong at 9.4% (2003: 7.7%), which is equivalent to a capital adequacy ratio of 20.8% when computed in accordance with the Banking Ordinance.  The cost-to-income ratio improved significantly further to 12.2% (2003: 17.4%).  The financial results of the HKMC are at Annex A.

    The total assets of the HKMC increased by 10%, from HK$40.9 billion in 2003 to HK$44.9 billion in 2004.  In spite of the difficult business environment, the HKMC was successful in purchasing a total of HK$11.4 billion mortgage loans in 2004 (2003: HK$15 billion).  The purchase comprised the acquisition of loans under various Government housing loan schemes and from Authorized Institutions and property developers.  The purchase of Government housing loans served the purpose of assisting the Government in its asset disposal programme to improve its fiscal position. The outstanding principal balance of the retained mortgage portfolio was HK$34.9 billion as at 31 December 2004 (2003: HK$34.6 billion).

    The Board has recommended a final dividend of HK$250 million or HK$0.125 per share, representing a dividend payout ratio of 37.7% for the year.  The dividend has been approved by the shareholders and will be paid out in April 2005.

Business Performance

    Through a steady and prudent expansion in the eligibility criteria and the product range, the Mortgage Insurance Programme (MIP) achieved substantial growth in 2004 both in terms of business volume (88% increase in volume over 2003) and market penetration ratio (from 13.5% for 2003 to 16% for 2004).  The launch of the 95% loan-to-value product in July 2004 has been particularly well received by the market.  This strong momentum continues into 2005.  For the first 3 months of 2005, the Corporation has received a total of 6,427 applications involving an aggregate mortgage loan amount of HK$13,650 million.  This volume is 48% higher than the average volume of 1,445 applications per month in 2004 and 85% higher than the 3,470 cases for the corresponding period in 2004.

    The HKMC raised over HK$13.8 billion in 2004 through 39 issues of debt securities and 2 MBS issues under the Bauhinia MBS Programme, further consolidating its status as the most active corporate issuer in the Hong Kong dollar debt capital market.  The Corporation was also the most active corporate issuer of retail bonds with a total issued amount of HK$2.9 billion in 2004.  The HKMC has issued a total of around HK$10.4 billion retail bonds through the issuing mechanism of Placing Banks since October 2001 up to December 2004.  As at 31 December 2004, the HKMC had 107 outstanding issues of debt securities with a total amount of over HK$35.5 billion.

Appointment of Board of Directors

    The HKMC held its 8th Annual General Meeting (AGM) today.  Twelve Directors have been re-appointed by the Financial Secretary for another term, including Mr Ronald Arculli, Professor Andrew Chan, Mr Chan Kam Lam, Mr Cliff Forster, Mr Ambrose Lau, Mr Edward Lau, Dr David Li, Mr Frederick Ma, Mr Abraham Shek, Mr Sin Chung-kai, Mr Michael Suen and Mr David Sun.  Two new Directors have been appointed by the Financial Secretary to replace Ms Anita Fung and Mr Andy Hon who had not offered themselves for re-appointment.  The new Directors are Mr Kenny Lam Kin Sun and Mr David Lam Yim Nam.  The composition of the new Board of Directors is at Annex B.

    Mr Kenny Lam is Director, Originations and Structured Derivatives of Societe Generale Asia Limited.  Mr David Lam is Deputy Chief Executive, Bank of China (Hong Kong) Limited.  

    "On behalf of the Board, I would like to thank the outgoing Directors for their invaluable advice and contribution, without which the HKMC would not have been able to achieve the results it had accomplished," said Mr Henry Tang, Chairman of the HKMC.  "I would also like to welcome the new Directors and look forward to their support in further development of the business of the Corporation," added Mr Tang.

     According to the Articles of Association of the Company, at each Annual General Meeting, all those Directors who are not Executive Directors shall retire but shall be eligible for re-appointment.  Hence, the term of appointment of the current Directors (other than the Executive Directors) will run until the next Annual General Meeting to be held around March/April 2006.

Ends/Tuesday, April 12, 2005

NNNN