The government-owned Hong Kong Mortgage Corporation Limited (HKMC) and its subsidiaries recorded a fall of 18 percent in after-tax profits in 2008 to 605 million HK dollars (78.14 million U.S. dollars), the company said here Thursday.

HKMC, established in March 1997 and wholly owned by the Hong Kong Special Administrative Region (HKSAR) government through the Exchange Fund, produced a return on equity of 10.5 percent and the capital-to-assets ratio remained strong at 8.7 percent, well above the minimum requirement of 5 percent.

The company declared a final dividend of 250 million HK dollars (32.3 million U.S. dollars) for 2008, representing a dividend payout ratio of 41.3 percent.

HKMC said its net interest income rose 61 million HK dollars (7. 88 million U.S. dollars) to 710 million HK dollars (91.7 million U. S. dollars) thanks to the expansion of the loan portfolio but its net interest margin of the average interest-earning assets dropped to 1.3 percent due to rising costs for hedging and funding.

With solid growth in secondary market activities, the new loans underwritten under the Mortgage Insurance Program soared 54.5 percent to 20.4 billion HK dollars (2.63 billion U.S. dollars).

However, the risk-in-force borne by the corporation rose 62.6 percent to 5.7 billion HK dollars (736 million U.S. dollars) due to the surge in loans underwritten and the increase in risk retention.