Hong Leong Finance's Q3 net jumps 84% on lower interest expense

The Hong Leong Finance branch at Clementi West.
The Hong Leong Finance branch at Clementi West.PHOTO: HONG LEONG FINANCE

Lower interest expenses helped Hong Leong Finance boost third-quarter net profit, it reported yesterday.

Earnings came in at $23.6 million, a jump of 84 per cent over the same period last year.

Fee and commission income rose 26 per cent to $3.8 million for the three months to Sept 30.

Annualised earnings per share for the quarter rose to 21.19 cents from 11.52 cents while net asset value per share came in at $3.86, up from $3.82 as at Dec 31.

Interest on loans in the third quarter was flat at $57.3 million while hiring charges rose 28 per cent to $12.4 million. Other interest income was up 7 per cent to $7.4 million.

Total interest income/hiring charges for the quarter increased by 3.6 per cent to $77.1 million due to a higher loan yields that were partially offset by a lower loan base.

Interest expense fell 30 per cent to $29.7 million.

The decrease resulted from a combination of a lower average deposits base and lower applicable interest rates.

Accordingly net interest income/hiring charges for the quarter gained 48 per cent.

Provisions for bad debts surged to $2.8 million; in the third quarter last year it had a writeback of $749,000.

Staff costs rose 2 per cent but other operating expenses fell 8.8 per cent, mainly due to reduced business promotion expenses.

Net loan assets including hire purchase receivables stood at $9.8 billion, flat from a year earlier and up 2.7 per cent from the end of 2016.

Deposits and balances closed at $10.7 billion as at Sept 30, up 1.7 per cent from a year earlier and 2.6 per cent higher from Dec 3.

Singapore's largest finance company said net profit for nine months rose 59 per cent to $60.9 million.

The company said with the prospect of higher interest rates, it will closely manage liquidity management and deposit taking activity.

"At the same time we roll out attractive loan packages to help SMEs with their cash flows and working capital." The company has 11 SME centres/ branches in Singapore.

The stock closed two cents higher at $2.72 on Friday.