Finance companies in Singapore have similar business models to commercial banks where they provide loans and credit facilities; fixed & savings deposits to individuals and corporations.
Finance companies are licensed under and governed by the Finance Companies Act wheres commercial banks are governed by the Banking Act.
However, Finance companies cannot offer deposit accounts which are repayable on demand by cheque, draft or order; they are unable to grant unsecured credit facilities with amounts exceeding S$5,000. In addition, Finance companies are unable to deal with any foreign, gold or other precious metals or acquire foreign currency denominated stocks, shares of debt securities.
There are three finance companies in Singapore:
- Hong Leong Finance (SGX: S41) – Equity value S$1.15 billion
- Sing Investment & Finance Ltd (SGX: S35) – Equity value S$204 million
- Singapura Finance (SGX: S23) – Equity value S$165 million
Hong Leong Finance
Incorporated in 1961, Hong Leong Finance is the financing arm of the Hong Leong Group with the Company transforming itself into Singapore’s largest finance company with a distribution network of 28 branches and more than 670 employees. The Company was listed in 1974 on the Singapore Exchange and has a market capitalization of S$1.15 billion, offering corporate & consumer domestic loans and deposits & savings for the small & medium enterprises (SME). Total assets grew from S$8.9 billion in FY2009 to S$11.7 billion in FY2013 with total loans growing from S$6.1 billion to S$9.1 billion over the same period.
Sing Investment & Finance Ltd
Sing Investments & Finance Ltd was incorporated in 1964 and has more than 40 years of lending experience in Singapore. Floating itself as a public company on the Singapore Exchange on 1983, The Company currently has a market capitalization of S$204 million. Business activities include fixed & savings deposits and the provision of loans and credit facilities to individuals and corporations which includes property-related loans; land & construction loans, machinery and motor vehicle loans. Since FY2009, the Company has grew its total assets from S$1.64 billion to S$2.07 billion in FY2013, with total loans accounting for S$1.55 billion in FY2013.
Singapura Finance is the smallest finance company in Singapore with a market capitalization of S$165 million. Total loans stood at S$801 million in FY2014 (fiscal year ends June), growing from S$523.6 million in FY2010. Most of its loans are in mortgages at S$625.7 million in FY2014. Despite its small equity value, Singapura Finance has grown its total assets from S$804.5 million in FY2010 to S$1.03 billion in FY2014.
Value in Action
Finance companies operate similar to commercial banks in Singapore, with limitations on other types of banking activities offered by commercial banks.
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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above.