Hong Leong Finance Q2 net profit dips 0.7%

Hong Leong Finance says the slower economic growth will continue, partly due to global events such as the Greek crisis and the downturn of the Chinese stock market.
Hong Leong Finance says the slower economic growth will continue, partly due to global events such as the Greek crisis and the downturn of the Chinese stock market.PHOTO: HONG LEONG FINANCE

But interest on loans jumps 21% due to an increase in its loan base, higher loan yield

Hong Leong Finance (HLF) has recorded a 0.7 per cent dip in second-quarter net profit to $13.9 million. Still, interest on loans for the period ended June 30 jumped a hefty 21 per cent to $58.3 million, thanks to an increase in its loan base and a higher loan yield. Net interest income and hiring charges rose 10.2 per cent to $41.2 million.

Net loan assets, including hire purchase receivables, stood at $9.918 billion as at June 30, a 3.5 per cent increase over the previous year's base of $9.583 billion as at Dec 31. For the first half, net profit rose 3.6 per cent to $29.5 million as net interest income and hiring charges rose 13.9 per cent to $141.4 million. Earnings per share for the three months was 12.58 cents, down from 12.69 cents in the same period last year.

Net asset value per share was $3.75 as at June 30, up slightly from $3.74 per share as at Dec 31.

An interim dividend of four cents per share has been declared.

  • AT A GLANCE

  • Interest on loans
    $58.3 million (+21%)

    Net profit
    $13.9 million (-0.7%)

    Earnings per share
    12.58 cents (-0.9%)

    Net asset value per share
    $3.75 (+0.3%)

In a statement, HLF said that due to a larger deposit base and higher prevailing interest rates, its interest payable on deposits increased. This resulted in a 26.7 per cent rise in interest expenses of $6.7 million.

It also stated that non-performing loans remain low and are substantially secured.

The company noted the slower-than-expected economic growth and predicted a continuation of this downward trend. It also said that global events, such as the Greek crisis and the Chinese stock market downturn, were keeping growth slow.

Despite this, it is focused on maintaining a healthy balance sheet and has rolled out its ninth small and medium-sized enterprises (SMEs) centre to take its services closer to SMEs, while ensuring that its Housing Board home loans remain competitive. HLF shares dropped three cents to close at $2.52 yesterday.

Jose Hong

A version of this article appeared in the print edition of The Straits Times on August 07, 2015, with the headline 'Hong Leong Finance Q2 net profit dips 0.7%'. Print Edition | Subscribe