The Audit Commission on Wednesday urged Hongkong Post to explore measures to boost its revenue in e-commerce services, after the postal department suffered losses from operations in seven of the past 10 years.

A report by the auditor noted that Hongkong Post also failed to meet the target rates of return on fixed assets for nine years in the past decade.

In 2022-23, the postal department recorded a loss from operations of HK$305 million and a rate of return on fixed assets of negative 13 percent – far from the 1.5 percent target.

Audit officials said local e-commerce services, which were intended to offset loss-making traditional mail services, did not perform well.

They noted that the profitability was negative each year throughout the previous five-year period with the deficit being around three-fold of the revenue each year, while Hongkong Post could not attain the budgeted revenue from local e-commerce services for each of the three years in the period from 2020-21 to 2022-23.

"[Hongkong Post] needs to continue efforts in increasing the revenue and the mail volume of local e-commerce services, and explore effective measures to improve the profitability of local e-commerce services," the report said.

The auditor cites Hongkong Post as saying it sets an aggressive target for budgeted revenues to motivate staff to maximise revenue generation. However, in the ever-changing business environment, there are many unforeseen developments, especially during the Covid-19 epidemic, which significantly impacted on [Hongkong Post's] ability to achieve the budgeted revenues.

The auditor also conducted a check on Hongkong Post's website and found that cross-border postal services for regions in mainland China were incorrectly listed as "international services".

The postal department has since revised such descriptions to "other destinations", according to the commission's report.

A separate examination by the commission showed that service agreements between Hongkong Post and stamp designers lacked specific clauses concerning safeguarding national security.

The Postmaster General said Hongkong Post attaches great importance to national security and will incorporate such clauses.