Singapura Finance FY2020 earnings fall 36.3% on allowances for loan impairment

SINGAPURA Finance's earnings fell 36.3 per cent to S$4.78 million for FY2020 ended December, hit by a S$2.3 million net charge for loan impairment losses, it disclosed in results released after the market close on Friday.

It recorded a slight 3.8 per cent increase in interest income and hiring charges to S$31.4 million in FY2020. However, interest expenses rose 35.2 per cent to S$13.2 million, resulting in a 11.1 per cent drop in net interest and hiring charges to S$18.3 million. This was because the increase in the cost of deposits outpaced the rise in interest income.

The bottom line was further weighed down by S$2.3 million net charge for loan impairment losses, compared with a S$1.4 million net writeback during the same period last year. This arose from additional allowances made for non-impaired loans, given the weak economic outlook.

As a result of the higher allowance for loan impairment, Singapura Finance released S$2 million from its Regulatory Loss Allowance Reserve to accumulated profit. The firm said that it continues to set aside "adequate" expected credit loss allowances with regards to its loan portfolio.

It added that its S$255 million in shareholders' funds, as at end-2020, is "more than adequate to buffer further volatility in the current economic slowdown".

The firm's total loan net of allowances rose 13.8 per cent to S$838 million as of end-2020. In the same period, its total deposits increased 7.3 per cent to S$907 million.

Looking ahead, Singapura Finance said that it expects a "challenging time", but will continue to be prudent in seeking new opportunities and manage its credit exposure.

Shares of Singapura Finance closed flat at S$0.875 on Friday.