Yangzijiang Financial H1 profit up 19.2%; looks to boost investments outside China

SINGAPORE – Yangzijiang Financial Holding reported earnings of $162.5 million for the first half of the fiscal year ended June, up 19.2 per cent from a net profit of $136.4 million in the corresponding year-ago period.

On a per-share basis, earnings rose to 4.39 cents from 3.45 cents. The company said this figure was boosted by its earnings growth, as well as its share buyback activity over the last 12 months.

No dividend was declared for the period under review as the company’s policy is to declare a dividend annually.

Total income for the period rose to $198.4 million from $173.8 million.

Segmentally, interest income – which constitutes mainly the group’s debt investment business and was the main income generator group for the period under review – was down 18 per cent to $151.6 million.

Yangzijiang Financial’s interest income from its debt investment business fell 20.3 per cent year on year in the first half to $143.1 million, due chiefly to a 19.5 per cent decline in interest income earned on the group’s debt investments.

This came on the back of a lower average debt investments balance in the first half, as well as an increase in non-performing loans since the second half of 2022 due to the deteriorating China real estate market.

Interest income from cash and cash equivalents, meanwhile, rose to $8.4 million from $5.4 million due to a higher cash balance and higher returns from the offshore yield enhancement cash management products denominated in United States dollars.

The company’s non-interest income – which comprises fee income and dividend income earned on investments in financial assets at fair value – stood at $46.9 million in the first half versus a loss of $11.1 million in the year-ago period.

Dividend income rose 54.2 per cent to $11.7 million due to higher dividend distribution from offshore fund investments.

The company also booked a gain of $34.5 million from net change in fair value compared with a loss of $19 million in the first half of last year.

The firm said it has made “good progress” in tackling non-performing loans in its debt investment portfolio in China over the past six months due to effective recovery efforts in the first half.

As at end-June, Yangzijiang Financial’s non-performing loans stood at 37 per cent, down from 41 per cent as at end-December 2022.

The company said it remains focused on diversifying its assets under management, and is looking to gradually increase its investments outside China over the next five years.

As part of its diversification strategy, the group said it intends to allocate half its funds to investments beyond China over the long term, and has also set a target to deploy approximately $1 billion of its proprietary capital into investments outside China by the end of 2023.

Mr Vincent Toe, chief executive officer of Yangzijiang Financial, said: “The group’s international portfolio has got off to a good start, and we are currently generating good returns from our investments. Our diversified set-up for this portfolio, currently spanning across four different asset types, aims to reduce portfolio volatility while yet concurrently achieve strong returns for all our stakeholders in the long run.”

Shares of Yangzijiang Financial ended last Friday flat at 36 cents.

THE BUSINESS TIMES