Hong Leong Finance reports 38% decline in net profit for FY20

HONG Leong Finance's net profit for the 12 months ended Dec 31, 2020 dropped 38 per cent year on year to S$63.91 million.

The group reported profit from operations before allowances of S$82.4 million for the year, down 34.3 per cent, due to the recession. Higher general loan loss allowances were set aside against inherent credit risk amid uncertainties arising from the pandemic, Hong Leong Finance said.

Net interest income fell 27.2 per cent to S$146.85 million due to compressed net interest margins as the dip in interest yields outweighed the savings from the lower cost of funds given lower interest rates.

Fee and commission income declined by 25.4 per cent to S$10.22 million, with lower fee income earned from both lending and non-lending activities last year.

Earnings per share worked out to 14.28 Singapore cents, down from 23.09 cents a year ago.

The board proposed a final dividend of 5.5 Singapore cents per share, down from 10 cents per share last year. Subject to shareholders' approval at an upcoming annual general meeting in April, the dividend will be paid on May 25.

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Describing 2020 as a challenging year, chairman Kwek Leng Beng said: "We are cautiously optimistic that the operating environment for 2021 will improve with the containment of the pandemic both globally and domestically, mainly because of promising vaccine developments."

Shares in Hong Leong Finance closed at S$2.43 on Thursday, up one cent or 0.41 per cent.