Sing Investments & Finance : First Half Financial Results 2022

Sing Investments & Finance Ltd (Incorporated in the Republic of Singapore) Head Office

96 Robinson Road #01-01 SIF Building Singapore 068899 Tel: [phone] Fax: [phone] www.sif.com.sg

Co Reg. No. 196400348D

SING INVESTMENTS & FINANCE LIMITED

FIRST HALF ANNOUNCEMENT

CONDENSED FINANCIAL STATEMENTS FOR SIX-MONTH ENDED 30 JUNE 2022

Table of Contents
	PAGE
Performance Highlights		1
Review of Performance		2
Significant Trends and Competitive Conditions in the Industry	2	- 3
Other Information required by SGX Listing Rule Appendix 7.2	3	- 5
Condensed Interim Consolidated Statement of Profit or Loss		6
Condensed Interim Consolidated Statement of Profit or Loss and Other
Comprehensive Income		7
Condensed Interim Consolidated Statements of Financial Position		8
Condensed Interim Consolidated Statement of Cash Flows		9
Condensed Interim Statements of Changes in Equity	10	- 11
Notes to the Condensed Interim Consolidated Financial Statements	12	- 25

1. PERFORMANCE HIGHLIGHTS

	1H 2022	1H 2021	Variance
	$'000	$'000	+/(-) (%)
Summary Statement of Profit & Loss Items
Interest income and hiring charges	39,715	37,148	6.9
Interest expense	(6,246)	(7,901)	(20.9)
Net interest income	33,469	29,247	14.4
Non-interest income	2,322	3,474	(33.2)
Total Income	35,791	32,721	9.4
Operating Expenses	(13,310)	(13,188)	0.9
Profit from operations before allowances	22,481	19,533	15.1
Write-back of allowances for credit losses	1,170	2,549	(54.1)
Profit before income tax	23,651	22,082	7.1
Profit after tax attributable to equity holders of the Group	19,684	18,338	7.3
Other comprehensive income	(15,207)	(3,347)	354.3
Total comprehensive income	4,477	14,991	(70.1)
Selected Balance Sheet Items	30-Jun-22	31-Dec-21
Total Equity	397,632	396,780	0.2
Total Assets	2,774,417	2,989,036	(7.2)
Loans and advances	2,171,550	2,250,514	(3.5)
Deposits and saving accounts of customer	2,186,042	2,364,937	(7.6)
Key Financial Ratios	%	%
Net Interest Margin	2.49	2.15
Non interest income to total income	6.5	10.6
Cost-to income ratio	37.2	40.3
Loans (excluding Loans funded by MAS) to deposit ratio	91.9	86.7
Non-performing loans ratio	1.0	2.7
Return on Equity 1	9.9	9.2
Return on Asset 2	1.4	1.2
Capital Adequacy Ratio - Company Level	15.85	15.08
Per Ordinary Share
Annualised basic/diluted earnings per share (cents)	24.98	23.27
Net asset value per share ($)	2.52	2.52

1. Return on Equity is computed based on ordinary shareholders' equity at balance sheet date
2. Return on Assets is computed based on total assets at balance sheet date

1. Audit or Review

The condensed interim financial statements of Sing Investments & Finance Ltd and its subsidiary (the "Group") comprise the condensed statements of financial position of the Group and the Company as at 30 June 2022, and the related condensed consolidated profit or loss and other comprehensive income, condensed statement of changes in equity of the Group and the Company, and condensed consolidated statement of cash flows for the six-month period then ended and the explanatory notes have not been audited or reviewed.

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2. Review of Performance

Following the record performance of 2021, the Group reported 7% increase in net profit after tax to $19.7 million for the first half 2022 ("1H 2022") compared to a year ago. The performance, a 1H high-water mark for SIF, was underpinned by write-back of interest in suspense and credit loss allowance following loan recovery. Non-interest income declined by $1.2 million or 33%. Operating expenses were marginally higher by 1%. Customer loans grew by 1% to $ 2.17 billion from 31 December 2021 while asset quality remained stable. A total of $1.2 million specific credit loss allowance was written back in 1H 2022.

Compared to 1H 2021, net interest income ("NII") increased 14% to $33.5 million, driven mainly by interest in suspense write-back from a final settlement of credit exposures to a corporate customer. Excluding the write-back, net interest margin ("NIM") would be 2.1%, the same as full year 2021 but 5 basis points lower compared to 1H 2021, as the loan yield declined while the Group continued to adapt to market competition.

Non-interest income decreased 33% to $2.3 million compared to 1H 2021 due to lower government grants, fee and rental income.

Compared to a year ago, operating expenses increased by 1% to $13.3 million, driven mainly by higher depreciation charges from technology investments. Staff cost was little changed at $8.8 million. Cost Income Ratio improved to 37.2% compared to 40.3% for the same period last year.

Asset quality was resilient as non-performing loan ratio improved to 1.0% from 2.7% a year ago driven primarily by the settlement of non-performing loans to a corporate customer. A total of $1.2 million specific allowance was written back in 1H 2022 compared to $2.5 million of general and specific allowances written back a year ago.

Net deficit in Other Comprehensive Income of $15.2 million for 1H 2022 was due to fair value losses of Singapore Government Securities ("SGS") as a result of rising interest rates. The Group holds SGS as part of its liquid assets to meet the regulatory liquidity requirements.

Loans grew by 1% to $2.17 billion whilst customer deposits declined to $2.19 billion, 5% lower from 31 December 2021. Loans to deposit ratio increased to 91.9% from 86.7% a year ago.

The Group's Capital Adequacy Ratio ("CAR") remained healthy at 15.9%, at 3.9 percentage point above the regulatory limit of 12.0% and 0.77% higher than as at 30 June 2021. Decline in CAR from 17.0% as at 31 December 2021 is due to the dividend pay-out made in the second quarter of 2022 for the financial year 2021. With the strong capital position, the Group remains committed to support our customers in growing and sustaining their business through challenging times.

3. Significant Trends and Competitive Conditions in the Industry

A continued recovery of the Singapore economy in the first and second quarter ("Q1 and Q2") of 2022 was reported in the Economic Surveys of the Ministry of Trade and Industry, Singapore ("MTI"). The growth, both year-on-year and quarter-on-quarter adjusted seasonably, is broad-based but at moderated rates compared to the fourth quarter ("Q4") of 2021. In May 2022, MTI expected the Singapore's Gross Domestic Product to expand by 3 - 5% in 2022 but with a downward bias as the global economic outlook has worsened since February 2022.

In the first half 2022, the Ukraine-Russia conflict, the sanctions it brought about and the lock-downs in parts of China have disrupted global supply chains and in turn, worsened global inflationary pressures. Labour markets remained tight and drove up salary costs. To rein in inflation, central banks have responded with sharper-than-expected rate hikes. US Federal Reserve began raising rates with 0.25% hike in March and another 0.75% in June 2022, and warned of further actions to fight inflation. SGD interest rates, which track USD rates in the same direction, have since increased significantly.

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3. Significant Trends and Competitive Conditions in the Industry (continued)

Looking forward, the prospect of protracted and escalated geographical conflicts has become more imminent and the supply-induced global inflation is likely to stay elevated for the remainder of 2022 and possibly into 2023. Global interest rates are expected to continue its upward trend as monetary policy normalisation and quantitative tightening accelerates across jurisdictions. Inflation and interest rate headwinds may offset border reopening and restriction easing tailwinds to dampen demands, slow economic activities and moderate growth prospects both globally and in Singapore.

In addition, the two wholesale digital banks in Singapore have started operations, focused on serving small and medium enterprises while the two full digital banks are expected to commence business later this year. Competition is therefore expected to intensify further with new competitors entering the market.

Against this backdrop, we will be proactive in managing our net interest margin in the environment of rising interest rates and continue to manage our risk exposures closely.

As a long term partner to our customers, we will focus on helping them cope with the congruence of supply chain disruptions, rising prices and borrowing costs and tapering of government support.

We aim to stay relevant and competitive as we continue to forge ahead with our digital transformation to sustain the Group's long-term growth for the benefit of all our stakeholders.

Other Information required by SGX Listing Rule Appendix 7.2

1. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results
   No forecast or prospect statement has been previously issued to shareholders.
2. Changes in the Company's share capital arising from rights issue, bonus issue, share buy backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for other purpose since the end of the previous period reported
   There has been no change in the Company's share capital arising from the above issues.
   As at the end of the financial period, there were no outstanding convertibles (31 December 2021: Nil).
3. Sales, transfers, disposal, cancellation and /or use of treasury shares as at the end of the financial period
   During the financial period, there have been no sales, transfers, disposal, cancellation and/or use of treasury shares.
4. Shareholders' mandate for interested party transactions ("IPT")

The Group has not sought any shareholders' mandate for IPTs pursuant to Rule 920 of the SGX-ST Listing Manual nor does it have any IPTs (30 June 2021: Nil).

8. SGX-ST Listing Manual Rule 720(1) - Procurement of undertakings to comply with listing rules from all directors and executive officers

Pursuant to Rule 720(1) of the SGX-ST Listing Manual, the Company has procured undertakings to comply with the Exchange's listing rules from all its directors and executive officers.

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