Hong Leong Finance (HLF) recently spoke with The Business Times on how the company has been battling the COVID pandemic. Here is the interview with HLF President Mr Ang Tang Chor, first published in the 8 October issue of Singapore’s business daily.
Customers representing 20% of Hong Leong Finance (HLF)’s loan portfolio have opted for deferred repayments amid the pandemic.
But all such loans, except the government-assisted Enterprise Singapore (ESG) loans, are secured. The ESG loans are intended to support viable businesses experiencing temporary cashflow difficulties amid the pandemic.
HLF President Ang Tang Chor told The Business Times that the finance company’s exposure to riskier sectors such as aviation, hospitality and tourism is “low”, although he declined to give a specific number.
Much of the company's loan book – which stood at S$11.15 billion as at 30 June 2020 - consists of loans to corporate customers involved in the property sector. Corporate customers make up about 75% of its loan book.
HLF also does not finance oil and gas traders. The latter group has come under the spotlight after several trading companies collapsed under their debt burdens.
To grow its loan book, HLF has instead turned to new niches in professional medical financing and accounts receivable financing in the past few years.
“We are unable to disclose the figures but it has been on double-digit growth yearly,” said Mr Ang, when asked about how much of the loan book is made up of contributions from these two market segments.
The company provides loans to medical professionals such as private specialists, dentists and aesthetic doctors. These loans are used for the purchases of medical suites and commercial properties to operate as clinics, as well as for clinic renovations.
“To offer better and newer treatment options, they often have to invest in the latest medical equipment like ultrasound machines and laser machines and we would also help finance such purchases too,” Mr Ang said.
As for accounts receivable financing, a working capital credit facility for businesses to extends sales credit terms, HLF’s customers include security guard agencies as well as companies engaged in the construction of infrastructure and buildings, manufacturing, and cleaning.
Even as it identifies new niches for growth, HLF is working to ensure it is able to defend its turf against fintech rivals. Mr Ang said HLF did not apply for a digital bank licence because there was no suitable partner, although there were discussions on possible tie-ups. But the company has other means of keeping up with customers' digital demands.
Digital efforts
Among its digitalisation efforts is a platform for vehicle hire-purchase applications, developed in collaboration with dealers including Porsche Services Singapore. It has also developed an automated rules engine for faster credit assessment and screening of applications, with the application outcomes communicated promptly to dealers and customers via the platform.
The collaboration with Porsche Financial Services Group has brought cross-selling opportunities for HLF, Mr Ang said, as many Porsche hire-purchase customers have gone on to tap the finance house’s other products. “These customers hold multiple products with us, including deposits, housing loans and company facilities in which they are business owners,” he said.
HLF is also in discussions with an established fintech company about the possibility of setting up a platform to complement its in-person service with digital options.
Personal touch, invest in staff
At the same time, HLF is investing in its staff to amplify the strength of its personal touch.
Mr Ang said employees are receiving rigorous customer service, product and risk management training as part of a strategy to build on three pillars: being attentive to customers’ needs, earning customers’ trust, and creating satisfied customers to build lifelong relationships for generations.
He said HLF’s customers value the personal touch, especially when they are making important financial decisions such as taking their first mortgage loan or opening their first deposit account.
“They want to do it right the first time, and so finding a trusted service is crucial... Digitalisation alone does not work. Professional staff who serve with sincerity and transparency is fundamental.”
