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Hong Leong Finance sees profits rise to S$45.1m in H1

Singapore Business Review logo Singapore Business Review 5/8/2022 Staff Reporter
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Hong Leong Finance reported net attributable profits of over S$45.1m for the first six months of the year, a 1% increase from the S$44.69m earned in the first half of 2021, its latest SGX filing showed.

The ‘resilient’ profit was due to earning a higher net interest income of S$96.4m, or 8.1% higher than the same period last year. This was thanks to improved interest yield on asset growth and lower funding costs due to global interest rate hikes, Hong Leong said.

Hong Leong Finance has announced an interim dividend of S$0.0375 to be paid on 1 September.

During the first half of 2022, Hong Leong’s fee and commission income jumped 73.6% to S$8.1mfor first half-year 2022, led by fee income from rebound lending activities. 

However, costs also rose, with total staff expenses rising 10.8% to S$36.1m, although compared to a lower base in 2021. The higher expenses was also due to headcount growth, which is part of Hong Leong Finance’s drive to enhance its risk and compliance management, as well as technology transformation. 

Other operating expenses soared 20.8% to S$8.4m, attributed to higher business transaction and promotional cost linked to improved lending activities amidst competitive market costs coupled with higher energy price, Hong Leong’s bourse filing said.

Loan growth was strong during the first half of 2022, with Hong Leong Finance’s net loan assets totalling S$11.45m as of 30 June. This is 7.1% higher or an increase of S$760m from end-2021’s S$10.69m.

Deposits and balances of customers also edged up to over S$11.74b as of 30 June, an increase of 8.7% or S$941m from last year.

Whilst noting their strong brand value throughout 2021 and in 2022 so far, Hong Leong Finance noted that the outlook for year-end remains volatile, citing uncertainties around interest rate hikes and its impact on the economy and business growth.

“We expect the higher interest rate to provide a boost to our assets yields while remaining cautious in the management of elevated market funding cost,” Hong Leong Finance wrote it its financial statement, adding that they will continue to stay vigilant on the management of interest rate volatility and asset quality amidst the global economic headwinds. 

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