Hong Leong Finance (S41) H2 2023 earnings summary

Executive summary

• FY2023 net profit fell 28.7% YoY to S$93.4m as net interest margin narrowed and lending growth moderated, partly offset by a S$4.6m net reversal of ECL allowances.

• Deposits rose 5.1% to S$12.65bn while net loans were broadly flat at S$11.66bn; capital adequacy remained above regulatory requirements at 16.3%.

Financial highlights

• Income before operating expenses declined 17.9% YoY to S$212.3m; net interest income fell 16.5% to S$202.2m and fee and commission income fell 39.2% to S$10.0m.

• Operating expenses rose 6.1% to S$104.9m, including staff costs up 9.6% to S$80.5m; profit before tax was S$112.0m, down from S$157.1m.

• Net profit attributable to owners was S$93.4m versus S$130.9m; basic EPS was 20.82 cents versus 29.21 cents.

• Total assets grew 4.8% to S$14.96bn and shareholders’ funds increased 1.0% to S$2.06bn; net assets per share rose to S$4.59 from S$4.55.

Outlook and guidance

• Cautiously optimistic on Singapore’s economic outlook; priorities include seizing strategic opportunities while maintaining financial prudence and sustainable value creation.

• HLF Digital, an internet and mobile transaction platform, is planned for 2024, alongside more digital and online services and an integrated omnichannel customer experience.

• 2024 initiatives include piloting paperless SME loan origination and online account opening, and targeting at least 80% complaint resolution within five working days.