Hong Leong Bank posts record net profit
CEO says performance due to strong revenue growth
KUALA LUMPUR: Hong Leong Bank Bhd is looking forward to another strong year after reporting a record net profit of RM2.64bil for the financial year ended June 30.
The increase in net profit represented a 23% increase year-on-year (y-o-y).
Group managing director and chief executive officer Domenic Fuda attributed the performance to strong revenue growth, prudent cost-management and improved contribution from its associate, Bank of Chengdu.
Moving forward, he said the bank expected to continue its strong performance into FY19, with improved loans growth and better contribution from its wealth management segment, among others.
He said the bank was targeting a 5% loan growth in FY19, in line with industry.
In FY18, the group’s gross loans, advances and financing grew 3.1% to RM129.1bil.
“Until June, industry loan growth was at 5%.
“For our financial year, I think a growth of around 5%, or a bit more is achievable,” he told a media briefing here yesterday.
The anticipated growth in loans, he said, would be on the back of stronger contribution across the board, particularly in mortgages and the SME segments.
He said a turnaround in auto loans was expected after having declined in FY18.
“In the first two months (of FY19) we have seen better growth in auto.
“Apart from the impact of the zero-rating of the GST, we also saw some market gain in this area,” he said.
For FY18, the group saw its revenue grow 6.3% to RM4.8bil, while return on equity (ROE) improved to 11.3% from 9.8% last year.
Net interest income grew 4.2% to RM3.4bil, leading to a net interest margin of 2.1%.
Non-interest income, meanwhile, grew 12.5% to RM1.3bil on the back of stronger income from wealth management and contribution from treasury operations.
On the group’s plans for its digital platform, he said they would continue to invest and have allocated between RM150mil and RM200mil in overall technology costs.
On another matter, Fuda said the bank was open to increasing its stake in Bank of Chengdu in line with China’s removal of limits on foreign holdings in its domestic banks.
Previously, foreign ownership was capped at 20% for a single institution.
The group’s stake in the Chinese bank had been diluted to 18% from 19.9% following an IPO in January.
“It has been a profitable relationship.
“In the past it was not possible to increase our stake as regulation did not allow, but now there may be an opportunity for us to increase our stake,” he said. EA Technique Salcon Mitrajaya Affin Bank Ireka OCK Spritzer
(90.03) (182.79) (9.46) – (36.61) (36.72) (7.28) – (4.33) (9.05) (1.41) – – – – – (94.40) (66.60) (3.44) – – (1.36) (0.84) (0.13) – – – – –
Optimistic: Fuda expects to continue its strong performance into FY19.