Zhitong Finance App learned that on October 26, Hong Kong Mortgage Corporation Limited (Mortgage Corporation) announced its 2026 interim results. Financial highlights show that unaudited comprehensive profit after tax for the first half of 2026 was HK$3 billion, a significant increase from HK$53.3 million in the first half of 2025.
The sharp increase in profits is mainly due to: (1) the rebound in the real estate market in the first half of 2026, which led to a return on accounting losses in the mortgage business; (2) the narrowing of accounting losses in the annuity business, mainly due to the spillover effects of annuity optimization and premium discount activities introduced in 2024, while the reduction in the number of newly issued insurance policies in the first half of 2026 narrowed annuity business losses; (3) the expansion of investment scale and the increase in return on investment led to an increase in exchange fund deposit income.
To better reflect core financial performance, excluding the impact of Hong Kong Annuity Company's financial performance, property price changes on the long-term mortgage business, and comprehensive financial accounting adjustments made by certified insurance companies, adjusted profit after tax was HK$1,083 million in the first half of 2026 and HK$884 million for the same period in 2025; the annualized return on equity was 7.2%, compared to 6.2% for the same period in 2025; the cost-to-revenue ratio was 11.7%, compared to 14.2% for the same period in 2025.
As of June 30, 2026, the implied value of the annuity business is approximately HK$30.1 billion based on the Insurance Industry Ordinance, including total equity of HK$27.7 billion and expected future profit of HK$2.4 billion.
In terms of capital adequacy ratio, after excluding the investment costs of unconsolidated regulated subsidiaries, the capital adequacy ratio of mortgage securities companies was 18.6% on June 30, 2026 and 18.1% on December 31, 2025, which is far higher than the 8% minimum requirement set by the Financial Secretary. The solvency ratios of Hong Kong annuity companies and certified insurance companies calculated on June 30, 2026 based on the risk-based capital system were approximately 2.4 times and 4.4 times, respectively, and 2.0 times and 3.9 times respectively on 31 December 2025, far higher than the statutory minimum requirements stipulated by the Insurance Authority.
The mortgage securities company said that based on the uncertain market environment, the company adopted a prudent pre-financing strategy and actively maintained communication with the local and international investment industry on bond issuance to support loan purchases and meet refinancing needs. With strong financing capabilities, stable capital and liquidity levels, the company's core business remains flexible and stable, and is fully prepared to deal with financial turbulence to implement strategic policy roles and achieve social goals.