Established since 1961 as the financing arm of conglomerate Hong Leong Group, and subsequently listed on the Singapore Stock Exchange in 1974, Hong Leong Finance Limited (SGX:S41) is currently Singapore’s largest finance company that offers a range of financial services to individuals, small and medium-sized enterprises (SMEs), as well as to larger corporations. At the time of writing, it has a total of 28 branches scattered across the different parts of Singapore.
After market hours this evening (24 February 2023), the finance company have made available its results for the second half, as well as for the full year ended 31 December 2022 (i.e. FY2022.)
In this post, you’ll find my review of its financial results, along with its dividend payout:
Financial Results (2H FY2021 vs. 2H FY2022, and FY2021 vs. FY2022)
In this section, you’ll find a comparison of the finance company’s results for the 2nd half of the current financial year against the same time period last year (i.e. 2H FY2021 vs. 2H FY2022), as well as its results for the whole of this year compared to the last (i.e. FY2021 vs. FY2022):
2H FY2021 vs. 2H FY2022:
| 2H FY2021 | 2H FY2022 | % Variance | |
| – Net Interest Income / Hiring Charges (S$’mil) | $88.7m | $145.8m | +64.3% |
| – Fee & Commission Income (S$’mil) | $6.5m | $8.3m | +26.7% |
| – Other Operating Income (S$’000) | $113k | $73k | -35.4% |
| Total Income (S$’mil) | $95.4m | $154.1m | +61.6% |
| Net Profit Attributable to Shareholders (S$’mil) | $40.1m | $85.8m | > 100.0% |
My Observations: Very impressive set of results for the 2nd half of FY2022, compared against the same time period last year (i.e. 2H FY2021) – with the net profit attributable to shareholders growing by more than 100.0% as a result of a very strong 64.3% jump in its net interest income/hiring charges (as net interest margin expanded by 70 basis points to 2.11%), as well as a 26.7% hike in its fee & commission income (from an improvement in lending activities.)
Another reason for the huge jump in the finance company’s net profit attributable to shareholders was due to a huge drop in allowances for doubtful debts and other financial assets by 70.3% from $3,099m in 2H FY2021 to just $920m in 2H FY2022.
FY2021 vs. FY2022:
| FY2021 | FY2022 | % Variance | |
| – Net Interest Income / Hiring Charges (S$’mil) | $178.0m | $242.2m | +36.1% |
| – Fee & Commission Income (S$’mil) | $11.2m | $16.4m | +46.3% |
| – Other Operating Income (S$’000) | $270k | $149k | -44.8% |
| Total Income (S$’mil) | $189.4m | $258.7m | +36.6% |
| Net Profit Attributable to Shareholders (S$’mil) | $84.8m | $130.9m | +54.3% |
My Observations: Just like its results for the 2nd half of FY2022, its results for the full year was also very impressive (in my opinion) – with the 54.3% jump in its net profit attributable to shareholders due to a 36.1% hike in net interest income/hiring charges (on the back of net interest margin expanding by 41 basis points at 1.82%, reaping the upside momentum from rising benchmark rates with effective interest rate repricing management), as well as in its fee & commission income (which skyrocketed 46.3% compared to last year due to an increase in lending activities.)
Dividend Payout to Shareholders
The management of the finance institution declares a dividend payout to its shareholders on a semi-annual basis – once when it releases its results for the first half of the financial year (known as interim dividend), and once when it releases its results for the second half of the financial year (known as final dividend.)
For the current period under review (i.e. 2H FY2022), a dividend payout of 13.25 cents/share was declared – a whooping 60.6% increase compared to the dividend payout of 8.25 cents/share paid out in the same time period last year (i.e. 2H FY2021.)
Together with its interim dividend of 3.75 cents/share, the total dividend payout for FY2022 amounts to 17.0 cents/share – when compared against the dividend payout of 12.0 cents/share declared in FY2021, this represents a strong 41.7% improvement.
If you are a shareholder of Hong Leong Finance, do take note of the following dates regarding its upcoming dividend payout:
Ex-Date: 09 May 2023
Record Date: 10 May 2023
Payout Date: 26 May 2023
Closing Thoughts
I’m sure you’ll agree with me that the finance company’s latest set of results is a very strong one – mainly attributable to a huge jump in its net interest income/hiring charges as a result of its net interest margin recording strong growth (due to a series of interest rate hikes by the Federal Reserve for the whole of 2022.)
Its dividend payout of 13.25 cents/share was equally impressive (and to be honest, I was pleasantly surprised by it.) Another thing to note is that the finance company’s full year dividend payout of 17.0 cents/share was the highest throughout the entire 11 period I have studied (about the company.)
Big thumbs up for its performance.
With that, I have come to the end of my review of Hong Leong Finance’s latest results for the second half, as well as for the full year 2022. I do hope you’ve found the contents above useful. As always, do note that this post is by no means any buy or sell recommendation for the finance company’s shares. Please do your own due diligence before you make any investment decisions.
Related Documents
Disclaimer: At the time of writing, I am a shareholder of Hong Leong Finance Limited.
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