Hong Leong Finance full-year profit up 38.1% to $118.3m on higher net interest income

SINGAPORE - Hong Leong Finance posted a net profit of $118.3 million for the full year ended Dec 31, up 38.1 per cent from $85.7 million a year ago, on the back of higher net interest income.

Earnings per share rose to 26.56 cents, from 19.27 cents previously.

Shares in Hong Leong Finance closed flat at $2.73 apiece on Wednesday.

A final dividend of 10 cents per share has been recommended by directors of the company, up from a final dividend of nine cents in the previous year.

This final dividend is subject to shareholders' approval at an annual general meeting to be convened on April 25, and will be payable on May 22, Hong Leong Finance said.

For its latest year, an interim dividend of five cents was also paid out on Sept 12, 2018, up from an interim dividend of four cents a year ago.

Hong Leong Finance's net interest income grew 20.9 per cent to $212.1 million for the full-year period, versus $175.4 million in the preceding year.

"This was driven by an uplift of net interest margin by 21 basis points, on the back of a rise in average loan yield, with higher loan growth outpacing a rise in average funding costs as compared to last year," it said.

Net recoveries of doubtful debts amounted to $2.2 million, against additional net loss allowance of $3.8 million in 2017.

In addition, loans and advances increased 3.1 per cent to $10.3 billion. Deposits and balances of customers also rose 6.4 per cent to $11.34 billion.

Looking ahead, Hong Leong Finance said that while momentum is expected to wane in 2019 as contributions from the manufacturing sector may weaken, the group remains "cautiously optimistic" about growth due to strong domestic demand.

Nonetheless, it noted that escalation of the trade dispute between US and China could dent consumer confidence and spending, and disrupt the global economy.

Hong Leong Finance added that it will focus on digital transformation, and on writing quality loans to drive revenue growth going forward.