HKMC adjusted profit surges to HK$1.5 billion in 2025
The Hong Kong Mortgage Corporation Limited (HKMC) announced significantly improved annual results for 2025, with adjusted profit after tax surging to HK$1,497 million. The corporation highlighted resilient operations and solid capital positions despite a reported consolidated loss.
Underlying profit nearly doubles
The Hong Kong Mortgage Corporation Limited (HKMC) reported a consolidated loss after tax of HK$109 million for 2025, a notable improvement from the HK$418 million loss in 2024.
This positive shift stemmed from increased income from Exchange Fund placements, higher annuity premiums, and capital injections into its annuity and insurance subsidiaries.
A recovering local property market also boosted the reverse mortgage business, alongside rising net interest income and revaluation gains on US dollar investments.
These improvements were partly offset by accounting losses in the annuity business, driven by a surge in new policies and the negative impact of lower discount rates on insurance liabilities.
Crucially, after excluding specific accounting impacts from its annuity and reverse mortgage operations, the HKMC's adjusted profit after tax surged to HK$1,497 million in 2025, nearly doubling the HK$787 million from the previous year.
This robust underlying performance resulted in a return on equity of 5.2 percent and a significantly improved cost-to-income ratio of 19.3 percent.
Robust capital and liquidity
The HKMC maintained robust financial health, with its Capital Adequacy Ratio (CAR) at 18.1 percent as of December 31, 2025, well above the 8 percent minimum.
Its regulated subsidiaries, HKMCA and HKMCI, also reported strong solvency ratios (approx. 2 times and 3.9 times respectively), exceeding regulatory minimums.
The annuity business's embedded value reached about HK$24.4 billion, indicating solid long-term viability.
Amid market uncertainties, the HKMC adopted a prudent prefunding strategy and engaged with investors for debt issuance.
Shareholder's equity grew to HK$51.2 billion, cash and short-term funds to HK$64.5 billion, and investment securities to HK$30.1 billion.
These strong capital and liquidity positions ensure the HKMC's operational resilience and readiness for future financial turbulence.
A nuanced financial picture
The HKMC's reported consolidated loss, though improved, offers an incomplete financial picture without specific accounting adjustments.
The substantial adjusted profit, driven by strategic initiatives and a recovering property market, reveals a fundamentally strong operational performance.
This dual reporting highlights mark-to-market accounting challenges for long-term social objectives, yet adjusted figures provide a clearer view of the corporation's robust health.