Hong Leong Finance H1 net profit down 38.7% to S$32.2 million on compressed net interest margins

Hong Leong Finance posted a 38.7 per cent year-on-year fall in net profit to S$32.2 million for the six months ended Jun 30, 2025.

This was driven by compressed net interest margins, at 1.3 per cent, as declining interest yields on loans and liquid assets outpaced the reduction in deposit costs from falling benchmark interest rates, the company said in an earnings statement on Friday (Aug 8).

Net interest income and hiring charges for the half-year shrunk by 20.8 per cent to S$89.2 million, from S$112.7 million.

Fee and commission income edged up 2.7 per cent to S$4.1 million, from S$4 million, supported by healthy loan fee income.

The non-performing loan ratio remained low at 0.4 per cent, thanks to the company’s “prudence in its credit risk management and close monitoring of high-risk sectors with adequate loss allowances to cover the loan portfolio”.

An interim dividend of 2.75 Singapore cents per share was declared for the half year, from 3.75 cents the year before. The dividend will be paid on Sep 5 after books closure on Aug 21.

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Total operating expenses for the half-year was up 9.1 per at S$60.8 million, from S$55.7 million.

Net loan assets increased by 1.9 per cent on the year to S$11.8 million. The loan portfolio remained “largely secured”, said the company.

“Looking ahead, the financial industry is expected to operate amid heightened macroeconomic uncertainty, shaped by persistent geopolitical tensions, moderating global growth, and shifting monetary policy landscapes,” it added.

“While central banks have signalled a potential gradual easing cycle, the path forward remains unclear, given ongoing inflationary pressures, geopolitical instability, and the impact of tariff measures.”

Shares of Hong Leong Finance closed 0.4 per cent or S$0.01 lower at S$2.77 on Friday.