HLFin – BT

Hong Leong Finance profit falls 18%

HONG Leong Finance (HLF) posted a net profit of $99.8 million, down 18.2 per cent, for the 2011 full year, due to the low interest rate environment, the group said.

The company announced separately yesterday the appointment of former Cabinet minister Raymond Lim as an independent non-executive director from March 1. Mr Lim is currently a director of the Government of Singapore Investment Corporation (GIC) and also a senior adviser to John Swire & Sons (South-east Asia).

The 2011 net profit was helped by the reversal of provisions of $26.8 million, up 11.9 per cent. The last time net profit fell below $100 million was in 2008.

It posted earnings of $78 million then, down 41.5 per cent as it was affected by the $55 million provisions it had to set aside for settlements with customers who bought structured deposits that subsequently went into default.

HLF, Singapore’s biggest finance company, said that 2011 earnings per share fell to 22.65 cents from 27.7 cents. Final dividend was unchanged at eight cents per share.

Net loan assets grew 18.7 per cent during the year to end at $7.5 billion while deposits and balances of customers stood at $7.8 billion, up 8.1 per cent.

It said the growth of its loan book helped offset the pressure on pricing for lending products.

‘Pricing for all categories of lending products continued to come under pressure, although this was mitigated by the growth in loan book,’ it said.

For the full year, total interest income/hiring charges fell 13 per cent due to competition, it said.

A bright spot was in fee and commission income which improved by 19.7 per cent to $8.6 million due to higher fee income from some lending products and corporate advisory services.

Staff and other costs were also controlled; staff cost rose slightly, 1.9 per cent to $58.1 million and other operating expenses was up 4.8 per cent to $20.2 million.

HLF’s outlook for this year remains cautious as it sees the euro crisis spreading to more countries and weakness in the US and China affecting the rest of the Asian markets. It also said that new property measures announced recently would impact prices and slow down sales of residential properties in the near term. ‘We continue to exercise caution in this segment of the market,’ it said.

The stock ended unchanged yesterday at $2.45.

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