Hong Leong Finance H2 profit up 113.7% to S$85.8 million on strong loan growth, higher asset yields
HONG Leong Finance posted a 113.7 per cent rise in net profit to S$85.8 million for its second half ended Dec 31, 2022, from S$40.1 million the year before.
In 2022, the finance company recorded strong loan growth and an uplift in its asset yields, which outpaced a higher cost of deposits amid the ongoing interest rate hikes, it said in a bourse filing on Friday (Feb 24).
Earnings per share stood at 38.28 Singapore cents for the half-year period, up from 17.93 cents the previous year.
The group’s net interest margin expanded by 70 basis points to 2.11 per cent in H2. This brought net interest income up by 64.3 per cent to S$145.8 million, as the company gained from rising benchmark rates amid interest rate repricing.
Its fee and commission income grew 26.7 per cent on year to S$8.3 million.
Meanwhile, net allowances for loans and other financial assets were lower at S$0.9 million for the half-year period, due to lower allowance for credit-impaired loans than in the same period last year.
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The group is recommending a final dividend of 13.25 Singapore cents per share, up from the 8.25 cents per share in the year earlier. Once approved by shareholders at the annual general meeting on Apr 27, the dividend will be paid on May 26.
For the full year, net profit rose 54.3 per cent on year to S$130.9 million, as net interest income gained 36.1 per cent to S$242.2 million. The group’s full-year fee and commission income grew 46.3 per cent to S$16.4 million on more lending activities.
Meanwhile, net allowances for loans and other financial assets increased to S$2.8 million on the back of higher allowances for non credit-impaired loans on revised risk parameters and higher loan portfolio.
The group expects 2023 will be “a year of normalisation amid cyclical headwinds”.
Hong Leong Finance chairman Kwek Leng Beng said the group will continue to focus on sourcing strategic opportunities, accelerating digital adoption and innovation, and exercising financial prudence.
Shares of Hong Leong Finance closed flat at S$2.40 on Friday.
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