SINGAPORE - Mainboard-listed IFS Capital reported on Wednesday that bad loans and lower income sent it deeper into the red, with a net loss of $8.1 million for the fourth quarter of its 2014 financial year, compared to a net loss of $3.9 million for the same period a year ago.
Net loss for the full FY2014 was $6.3 million from $3.4 million a year ago, largely due to "higher net claims incurred and higher operating expenses but helped by higher net earned premium revenue and lower allowances for loan losses and impairment of investments."
Total revenue for FY2014 dropped 9 per cent mainly from lower net interest income and lower non-interest income. Total operating expenses rose 5 per cent to $21.2 million, mainly from higher staff costs.
Net claims for the fourth quarter ended December 31, 2014, were $4.2 million compared to $0.7 million in Q4 2013, said IFS, which provides financial services to small businesses. Its operating profit before net claims incurred and allowances for the quarter fell 25 per cent to $3.5 million, down 25 per cent from $4.7 million a year ago.
IFS said it "faces challenges in its business environment in 2015, with the possibility of bad loans demanding the attention of management."
It said it is "enhancing its risk management and credit processes while stepping up its efforts at recoveries."
In Singapore, business volume has increased and this improvement is expected to continue, said IFS.
IFS's regional subsidiaries, overall, saw bigger losses for FY2014 and face challenges ahead.
In Thailand, the company faces a more challenging economic environment but expects to maintain its profitability in 2015, it said. Its Thai subsidiary reported a net profit of $3.7 million for FY2014, down 6 per cent from $4.0 million in 2013 million mainly on lower revenue but helped by lower allowances for loan losses.
In Malaysia, the reduction in government spending will affect the group's public sector business, said IFS. It will continue expanding into private sector related activities. The Malaysia subsidiary reported a higher net loss of $4.8 million compared to $4.3 million in 2013, mainly on higher impairments.
Its Indonesian business also faces a difficult environment, and IFS said it will have to manage a higher risk of potential bad loans. Its Indonesia subsidiary posted a net loss of $1.5 million, reversing from a net profit of $277,000 in 2013, mainly due to additional allowances for loan losses.
Overall, regional subsidiaries recorded higher net loss after non-controlling interests of $3.2 million compared to $862,000 in 2013.
IFS said its real estate investment and financing division had performed well and will contribute in 2015.
Its insurance subsidiary, ECICS, has spent significant resources in the last quarter of 2014 developing the basic infrastructure, distribution channels and products to grow the general insurance business.