Hong Leong Finance (HLF) announced that its earnings for 1HFY2024 ended June 30 have increased by 12.9% y-o-y to $52.6 million from $46.6 million a year ago, driven by higher net interest income at an expanded net interest margin of 1.6%.
During the period, interest on loans grew 6.2% y-o-y to $230.7 million, hiring charges were 12.2% higher at $26.4 million and other interest income was 43.5% higher at $46.7 million.
Net interest income rose 11.1% to $112.7 million on the back of improved assets yields, outpacing the elevated funding cost y-o-y.
Fee and commission income declined by 9.2% to $4.0 million on subdued large mortgage lending activities in financial markets.
Total operating expenses increased slightly by 5.6% to $55.7 million mainly due to higher staff cost from annual salaries increment and resources to enhance regulatory compliance and risk management with our focus in business transformation. It was partially offset by the broad-based decline in the operating expenses with tightened cost control.
Net allowances for loans and other financial assets were a net write-back of $2.1 million in 1HFY2024 as compared to $2.7 million in the corresponding period. This included a reversal of $1.6 million in allowances for non credit-impaired loans with improved risk parameters and a reversal of $0.2 million in allowances for credit-impaired loans with loan repayment. Asset quality remained resilient as the group continued to exercise prudence in its credit risk management and underwriting parameters with adequate loss allowances to cover the loan portfolio. The non-performing loan ratio remained stable at 0.7%.
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Net loan assets totalling $11.6 billion as at June 30, down by 1.1% y-o-y. The loan portfolio remained largely secured.
In tandem with the reduced loan assets, deposits and balances of customers decreased to $12.2 billion as at June 30, representing a decrease of 3.9% over the previous year’s base or 0.1% over corresponding period.
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 $2.9 billion as at June 30. The group maintained liquidity above regulatory Minimum Liquid Asset (MLA) and remained highly liquid to manoeuvre the market uncertainties.
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Looking ahead, HLF remains steadfast to navigate the evolving landscape of interest rate trends, domestic and global economic conditions, market dynamics and business environments. Its strategic focus on sustainable growth, operational efficiency and robust risk management will enable it to capitalise on opportunities and mitigate challenges, as the group strives to create enduring value for its stakeholders.
Shares in HLF closed at $2.42 on Aug 8.
