Hong Leong Finance S41 records 2HFY2022 ended December earnings of $85.8 million, up 113.7% compared to the same period last year.
For the full year, the company reported a record earnings of $130.9 million, up 54.3% from the previous year. This is driven by strong loan growth and uplift of asset yields outpacing higher cost of deposit amid the ongoing interest rate hikes.
Net interest margin for 2HFY2022 expanded to 2.11%, bringing net interest income up by 64.3% to $145.8 million. For FY2022, net interest income rose by 36.1% to $242.2 million on the back of expanded net interest margins at 1.82%, reaping the upside momentum from rising benchmark rates with effective interest rate repricing management.
Fee and commission income increased 26.7% to $8.3 million for 2HFY2022 and 46.3% to $16.4 million for FY2022 from lending activities.
Staff costs were higher by 16.7% to $37.3 million for 2HFY2022, while increasing by 13.8% for FY2022 to $73.4 million. This is mainly on a lower base last year and annual increment, as well as investment in resources to strengthen its key transformation initiatives, compliance and risk management.
Other operating expenses increased 15.2% to $9.2 million and 17.9% to $17.6 million for second half and full year 2022 respectively, attributed to higher business transaction, marketing promotion expenses and premises cost.
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Net allowances for loans and other financial assets for 2HFY2022 was lower at $900,000, arising from lower allowance for credit-impaired loans compared to the same period last year.
For FY2022, net allowances for loans and other financial assets increased to $2.8 million.
Net loan assets totalled to $11.65 billion as at December 31 2022, up 8.9% over the previous year’s base of $10.69 billion as at end 2021.
“To drive operational resiliency and business sustainability, we will step-up our digital adoption and transformation as part of our business strategy to scale our business growth and expand our service offering, in complement with our strong branch network to deliver omnichannel experiences, enhance customers’ engagement and enable value creation,” the company says in its results filing.
Looking ahead, Hong Leong Finance remains watchful that 2023 will be a year of normalisation amid cyclical headwinds. “We will monitor the impact of interest rate on our asset and liabilities management and strengthen our risk management to sustain growth and profitability,” it adds.
Shares in Hong Leong Finance closed at an unchanged $2.40 on Feb 24.
