For the first half of fiscal year 2023, Hong Leong Finance recorded net attributable profit of $46.6 million, an increase of 3.2% year over year, primarily due to greater net interest income and the write-back of anticipated credit loss allowances.
The improvement in interest yields drove a 5.2% year-over-year increase in net interest income to $101.5 million. In the midst of the high interest rate environment, the net interest margin narrowed by four basis points (bps) to 1.48% as the increase in funding costs outpaced the increase in asset yields year over year.
Due to the slow lending activity for development and club loans in the current financial markets, fee and commission income decreased by 45.7% year over year to $4.4 million in 1HFY2023.
Due to higher personnel costs on a lower base in 1HFY2022, which were largely offset by lower operational expenses due to tighter cost control, total operating expenses grew by 8.9% year over year to $52.8 million. The interim dividend, which was reduced from 3.75 cents per share at this time last year by the board of directors, will be paid on August 31.
In contrast to a net allowance of $1.8 million in the prior period, net allowances for loans and other financial assets were $2.7 million in the first half of fiscal year 2023.
This includes the reversal of $0.6 million in allowances for credit-impaired loans as well as the reversal of $2.1 million in allowances for non-credit-impaired loans on new risk parameters. The ratio of non-performing loans stayed constant at 1.6%.
As of June 30, net loan assets were $11,665 million, an increase of $14 million, or 0.1%, from December 31, 2022. As of June 30, customer deposits and balances totalled $12,164 million, an increase of 1.1% or $134 million from December 31, 2022.
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