Hong Kong's cumulative default rates for the Special 100 percent Loan Guarantee and the Personal Loan Guarantee Scheme reached 18.5 percent and 21.2 percent, respectively, said Colin Pou Hak-wan, executive director and chief executive officer of The Hong Kong Mortgage Corporation.
These figures came as the epidemic brought changes in lifestyle habits and economic conditions of some citizens, as well as slower recovery of the operating environment for some small and medium-sized enterprises, he said.
Currently, the Special 100 percent Loan Guarantee and the PLGS have recovered approximately 37 percent and 41 percent of their loans, respectively, while the majority of the remainder are in scheduled repayment, he added.
As of the end of October, for the Special 100 percent Loan Guarantee, more than 30 percent of defaulting borrowing enterprises and their guarantors are facing or have undergone winding-up and bankruptcy proceedings, while nearly 20 percent are being pursued through court order applications.
For the PLGS, nearly 20 percent of defaulting borrowers are facing or have undergone bankruptcy, with the rest being handled similarly by appointed agents, in-house debt collectors, or court orders.
Pou noted that the two products are designed to provide timely support to enterprises and citizens affected by the epidemic, so the repayment ability of the borrowing enterprises or borrowers was not a primary consideration in the approval process, adding that the government assumed an overall default rate for both at 25 percent.
To prevent illegal activities in obtaining loans under these two products, the HKMCI and lending institutions rejected or withheld a total of approximately 3,100 applications, involving about HK$5.31 billion, effectively avoiding potential risks and default losses.
He said that these two products have benefited around 25,000 enterprises and around 400,000 employees as of the end of November.
