Hong Leong Finance H2 net profit up 46.5% to S$40.1m

HONG Leong Finance posted net profit of S$40.1 million for the 6 months ended December 2021, up 46.5 per cent from earnings of S$27.4 million in the corresponding year-ago period.

On a per-share basis, earnings came in at S$0.1793 versus S$0.1224 in H2 FY2020.

In a filing to the Singapore Exchange on Wednesday (Feb 23), the company reported full-year earnings of S$84.8 million for FY2021, up 32.7 per cent from S$63.9 million in FY2020. The improved performance was driven by stepped-up efforts in managing the cost of fund and lower loan loss allowances.

Hong Leong's board of directors is recommending a final dividend of S$0.0825 per share, up from the final dividend of S$0.055 in FY2020. The final dividend is subject to shareholder approval at the company's annual general meeting on Apr 29, and is payable on May 27.

For H2, interest income and hiring charges fell 11.9 per cent to S$116.9 million from S$132.6 million, while interest expense tumbled 58.6 per cent to S$28.1 million.

Net interest income and hiring charges rose 37.2 per cent to S$88.7 million, as the strategic management of deposits allowed the group to reap a substantial saving in funding cost, which outpaced the prolonged low loan and asset yields.

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Fee and commission income for the period was up 20.2 per cent to S$6.5 million from both lending and corporate finance activities.

As at end-December 2021, Hong Leong's net loan assets totalled S$10.7 billion, down 2.3 per cent from end-December 2020. Deposits and balances of customers were pared to S$10.8 billion as at end-December, in line with lower net loan growth and the optimisation of funding costs.

With economic normalisation at work and bracing for a rising interest rate environment, Hong Leong said it will continue to maintain strong capital position and prudent funding management to support lending activities.

It added that it will keep apace with the adoption of e-payment services for counter products such as Fixed Deposits, Savings and Business Current Accounts and the roll-out of Digital Loan Application and processing, on the back of the rapid shift to a digital and contactless way of life that has been accelerated by the Covid-19 pandemic.

"The reopening of the domestic and global economies will provide renewed impetus to growth over the next 12 months. We remain positive on the long-term outlook but are watchful of the near-term headwinds from the unpredictable arc of the pandemic prognosis," added the company.

Shares of Hong Leong Finance ended Wednesday unchanged at S$2.54.