Incorporated in 1961 as a medium-sized enterprise, Hong Leong Finance (SGX:S41) has evolved to become Singapore’s largest finance company today, where it offers an extensive suite of financial products and services spanning from deposits and savings, corporate and consumer loans to government assistance programmes for SMEs, corporate finance, and advisory services through their network of 28 branches scattered across the whole of Singapore.

2022 was certainly a year for the finance company to remember, as it received a number of awards and accolades, including:

  • Top 1000 World Banks 2022, Top 100 ASEAN Banks 2022, and Best-Performing Bank in Singapore 2022 by ‘The Banker’
  • Market Leaders in Singapore for Corporate Banking & SME Banking by ‘Euromoney’
  • ASEAN Finance Company 2022 by ‘Asian Banking & Finance’

Following the conclusion of the financial year on 31 December 2022 (you can read my review of its results for the second half, as well as for the full-year here), the finance company have released its annual report for 2022 early this morning (30 March 2023.)

For the benefit of those who do not have the time to go through the report, you can read about a summary I have compiled here, along with details about its upcoming AGM:

Summary of Hong Leong Finance’s Annual Report

Financial Review:

  • Net profit attributable to shareholders was at a record high of $130.9m, up 54.3% from the previous year (FY2021: $84.8m), driven by strong loan growth and uplift of asset yields outpacing higher cost of deposit amid the ongoing interest rate hikes.
  • Net interest income for 2022 rose by 36.1% to $242.2m (FY2021: $178.0m) on the back of expanded net interest margin by 41 basis points at 1.82%, reaping the upside momentum from rising benchmark rates with effective interest rate repricing management.
  • Fee and commission income increased 46.3% to $16.4m (FY2021: $11.2m) from lending activities.
  • Capital Adequacy Ratio continues to remain strong at 16.1% as at 31 December 2022, well above the prescribed requirement.
  • An interim dividend of 3.75 cents/share was paid on 1 September 2022. Together with the proposed payment of a final dividend of 13.25 cents/share, its full year payout amounts to 17.0 cents/share, with the payout ratio at 58.2%.

Stepping up on Digitalisation to be More Inclusive in Customer Offerings:

  • Significant digital initiatives were rolled out to further enhance its customer service, including an in-house consumer loan origination system that leveraged system automation to shorten loan disbursement processing time.
  • To improve customer service experience for car loans applications and at the same time simplify the purchasing process, it will be implementing an enhanced digital loan application process in 2023 to serve more car dealers and provide greater security and convenience to its customers.
  • With an increase in demand for digital payment solutions, Hong Leong Finance partnered with a fintech company to launch HLF FASTPAY, a multi-currency e-wallet that offers low transaction costs and attractive exchange rates for over 20 commonly used currencies, allowing customers to enjoy more payment solutions conveniently and securely.

Providing Timely and Relevant Solutions to Customers:

  • With the re-opening of borders post-pandemic that promoted economic activity, Hong Leong Finance have helped SMEs stay afoot in their business recovery by providing financial support and solutions, along with rendering corporate finance services to growth companies in areas such as corporate restructuring and corporate governance advisory, as well as sponsoring several Catalist companies.
  • The finance company have also transited to SORA-based interest rates to offer transparent and reliable borrowing rates to commercial property borrowers, along with rolling out a new working capital financing called BizCap Loan to improve SMEs’ liquidity.
  • To help individuals manage inflation, Hong Leong Finance also offered higher deposit rates for customers to grow their savings, along with fixed rate home loans to protect them from rate hikes.

Strong Employee Collaboration and Business Resilience:

  • To maintain high service standards, the company has provided employee training on new digital capabilities and ups killing to improve collaboration for creation of more positive and personalised customer experience.
  • To build resilience in unexpected scenarios, the company continues to strengthen its business continuity management, such as conducting regular business impact analyses to enhance its risk mitigation strategies and response capabilities.
  • A review on the company’s operational footprint have also been embarked to manage risks, with adjustments to be made across its operations to keep employees, processes, systems, and businesses resilient.

Progress on Sustainability and Climate Change:

  • Apart from promoting hybrid and electric vehicle loans and seeking collaborations with like-minded partners to finance green buildings, Hong Leong Finance also conduct regular EESG (Economic, Environment, Social and Governance) risk assessments for all business loan applications and perform annual checks for those operating in high-risk sectors for a low-carbon future.
  • With increased adoption of paperless workflows, and higher usage of energy-efficient devices, its paper and energy consumption levels remained stable despite its employees returning to office.

Outlook Ahead:

  • Amid global uncertainties coupled with rising inflation, Singapore’s economic growth for 2023 is expected to be slower compared to 2022. Despite of that, Hong Leong Finance remains committed to supporting its customers’ financial needs and help them work towards long-term sustainability.
  • The finance institution will continue its work to focus on sourcing strategic opportunities, accelerate adoption and innovation, and exercise financial prudence with its strong governance practices.

Details of Hong Leong Finance’s 63rd Annual General Meeting

When? Thursday, 27 April 2023
Time? 11.00am
Where? Orchard Hotel Singapore, Ballroom 3, Level 3 – 442 Orchard Road, Singapore 238879

The meeting will be held in-person, with no options for shareholders to attend virtually.

Those with their shareholding in their CDP, as well as in their CPF/SRS accounts need not pre-register – verification of shareholding will be done on the day itself. However, for those with shareholding in a custodian account, they will need to submit a request to their brokerage platform to appoint them as a proxy to attend the meeting.

Related Documents

Disclaimer: At the time of writing, I am a shareholder of Hong Leong Finance Limited.

Launch Event for My First Book: building your REIT-irement portfolio

building your REIT-irement portfolio by Lim Jun Yuan - Official Book Launch on 26 September 2023

After months of hard work, my first book, 'Building Your REIT-irement portfolio' is finally ready! In this easy-to-follow 178-page guide, you'll learn everything you need to know about building a REIT portfolio that can provide for you in your retirement years. You can check out a preview of the book here.

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For more details and to RSVP (seats are extremely limited), click on the link below:

Click here for more details on the book launch event and RSVP here...