SINGAPORE (Nov 13): Hong Leong Finance reported a 55.6% increase in 3Q earnings to $36.7 million from a year ago on the back of higher net interest income.

Net interest income/hiring charges rose 15.4% to $54.7 million driven by an increase in net interest margin of 15 bps led by a rise in average loan yield from floating rate loans outpaced a rise in funding costs, given a rising interest rate environment.

Profit from operations before allowances/provision came in 18.4% higher at $36.8 million after deducting operating expenses from income of $58.5 million.

Factoring in provisions and recoveries of $7.4 million for the quarter, profit before tax came in at $44.2 million.

As at Sept 30, deposits and balances of customers closed at $11.3 billion, up 6% from $10.7 billion a year ago, in line with higher funding requirements.

Given rising interest rates as well as the possibility of a broad-based correction in global capital markets due to escalating global trade tensions and rising geopolitical risks, Hong Leong Finance says it will continue to adopt a cautious stance to write loans selectively and focus more on risks.

The group says it will also support local SMEs in these difficult times through various SME schemes. The group says it has also “embarked on a digital transformation journey with several projects on hand”.

No interim dividend has been declared for the quarter although an interim dividend of 5 cents was declared for 2H.

Year to date, shares in Hong Leong Finance are down 6.6% to close at $2.55 on Tuesday.