Hong Leong Finance S41 has reported net attributable profit of $46.6 million for 1HFY2023, up 3.2% y-o-y, mainly driven by higher net interest income and write-back of expected credit loss allowances.
Net interest income rose 5.2% y-o-y to $101.5 million on the back of improved interest yields.
Net interest margin was moderated by four basis points (bps) at 1.48% as the rise in funding cost outpaced the uplift in asset yields y-o-y, amid the elevated interest rate environment.
Fee and commission income declined by 45.7% y-o-y to $4.4 million in 1HFY2023 on subdued lending activities for development and club loans in current financial markets.
Total operating expenses increased by 8.9% y-o-y to $52.8 million due to higher staff cost on lower base in 1HFY2022, partially offset by lower operating expenses with tightened cost control.
The directors have declared an interim dividend of 3.5 cents per share, down from 3.75 cents this time last year, which will be paid on Aug 31.
See also: Hong Leong Finance reports record earnings of $130.9 mil for FY2022, up 54.3% y-o-y
Net allowances for loans and other financial assets for 1HFY2023 was a net reversal of $2.7 million as compared to a net allowance of $1.8 million in the corresponding period.
This included a reversal of $2.1 million in allowances for non credit-impaired loans on revised risk parameters and a reversal of $0.6 million in allowances for credit-impaired loans.
The non-performing loan ratio remained stable at 1.6%.
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Net loan assets totalled $11,665 million as at June 30, up by 0.1%, or $14 million, from Dec 31, 2022.
Deposits and balances of customers increased to $12,164 million as at June 30, representing an increase of 1.1% or $134 million from Dec 31, 2022.
Cash and cash equivalents including statutory deposit with the Monetary Authority of Singapore (MAS) together with Singapore Government debt securities, MAS Bills and MAS FRN held as liquid assets amounted to $2,779 million as at June 30, up from $2,549 million on Dec 31, 2022.
“Against the backdrop of economic challenge and market volatility, Hong Leong Finance will continue to strengthen the strategic management of its assets and liabilities to optimise the return on net interest margin and mitigate the interest rate and liquidity risk,” says the company.
Shares in Hong Leong Finance closed flat at $2.56 on Aug 3.
