Hong Leong Bank Q1 earnings up 8%, aided by higher income

PETALING JAYA: Hong Leong Bank Bhd (HLBB) reported a 7.9% rise in net profit to RM542.63 million for the first quarter ended Sept 30, 2016 compared with RM502.96 million in the previous corresponding period, driven by higher net income of RM73.0 million and higher share of profit from associate company and joint venture totalling RM10.0 million.

Its revenue rose 7.1% from RM1.02 billion to RM1.1 billion.

In a filing with the stock exchange, HLBB said its net interest income expanded 5.4% to RM801 million, benefitting from focused loan pricing, lower cost of funding due to the maturity of higher cost fixed deposits campaigns and redemption of capital securities in preceding quarter.

Consequently, its net interest margin rose seven basis points to 2.01%, despite the 25 basis-point cut in the Overnight Policy Rate in July 2016.

HLBB’s non-interest income sustained its growth momentum, with a 12.2% growth to RM295 million, mainly supported by higher income from treasury operations. Its gross loans and financing expanded 4.0% to RM121.0 billion with a gross impaired loan ratio of 0.84%.

HLBB is in robust capital positions with common equity tier 1 (CET-1), tier-1 and total capital ratios improving to 12.9%, 13.3% and 14.8% respectively.

Moving ahead, the group managing director and CEO Domenic Fuda said he expects moderate growth in loans and deposits in the coming quarters as the Malaysian economy remains on a moderate growth trajectory, amid continued support from domestic demand especially private sector activities.

“The group will continue to strengthen digital offerings and customer analytics capabilities to add value and differentiate our multi-channel banking services for both domestic and regional businesses.

“At the same time, there will also be strong emphasis on improving operations efficiency and scaling productivity through strategic cost management for superior return and sustainable growth,” he said.