Hong Leong Bank FY22 earnings rise 15%

PETALING JAYA: Hong Leong Bank Bhd (HLB) has reported growth in its top line and bottom line for its financial year 2022 (FY22), with net profit improving 15% year-on-year (y-o-y) to Rm3.3bil.

In a statement, HLB group managing director and chief executive officer Domenic Fuda said the improvement in net profit was led by the bank’s solid loan and financing growth, tight cost controls, lower loan impairment allowances and robust contributions from its associates.

Consequently, return on equity improved to 10.9% in FY22.

Commenting on the bank’s gross loans and financing portfolio, Fuda said: “Our gross loans and financing portfolio grew 8% y-o-y to Rm168.2bil, backed by expansion in our mortgage, small and medium enterprises or SMES and corporate business segments, as we remained resolute in extending various financial assistance to our clients to ensure business requirements are met seamlessly.

“Concurrently, we place strong emphasis on our credit underwriting process as evidenced by a solid overall gross impaired loan (GIL) ratio of 0.49%, with a sufficient loan impairment coverage of 211.8%,” he added.

For its fourth quarter ended June 30, 2022 (4Q22), the bank saw an improvement in its revenue, recording about Rm1.5bil compared with Rm1.3bil in the previous corresponding quarter.

This brought the bank’s revenue for FY22 to Rm5.6bil, a 2.4% y-o-y growth, underpinned by higher net interest income but negated by a lower non-interest income against the continued unfavourable market conditions.

Meanwhile, net profit in 4Q22 improved significantly to Rm907.64mil compared with Rm689.48mil in the previous comparative period.

Consequently, earnings per share (EPS) rose to 44.32 sen for 4Q22 compared with 33.68 sen in 4Q21.

For FY22, the bank recorded an EPS of 160.6 sen, an increase from 139.72 sen in its previous financial year.

The bank has declared a dividend of 37 sen per share for 4Q22.

This brings the total dividend for FY22 to 55 sen per share at a payout ratio of 35%.

This is a slight improvement from the dividend of 50 sen per share declared in FY21.

The bank noted that its international operations accounted for 26.1% of its pre-tax profit in FY22, primarily driven by the robust contribution from Bank of Chengdu (BOCD).

“Profit contribution from BOCD improved 40.5% y-o-y to Rm1.0bil in FY22, representing 23.2% of the bank’s pre-tax profit,” it said.

The bank’s net interest income in 4Q22 improved 1.7% y-o-y to Rm1.16bil, led by solid loan and financing expansion and continuous efforts in optimising funding costs.

For FY22, net interest income was 7.2% higher y-o-y at Rm4.62bil. This translates to a net interest margin of 2.14% for FY22.

On the other hand, non-interest income for FY22 was compressed at Rm979mil with a non-interest income ratio of 17.5%.

This is mainly attributed to lower disposal gains on investment securities.

“This was alleviated by a stronger income stream from wealth management and credit card fees as consumer sentiment improved coupled with the recovery in retail spending activities,” the bank said.

“Operating expenses for FY22 inched higher to Rm2.1bil, as we tightly managed our expenses across the quarters,” it said, adding that the cost-to-income ratio was commendable at 37.5%.

Commenting on growth on its loan and financing portfolio, the bank said domestic loans and financing growth of 6.7% y-o-y continued ahead of the industry growth rate of 5.7% y-o-y.

Residential mortgages were 6.8% higher y-o-y at Rm82.4bil while transport vehicle loans/financing expanded by 5.3% y-o-y to Rm17.7bil.

“Domestic loans to business enterprises increased 13.3% y-o-y to Rm55.2bil, whilst our support of SMES saw this loan/financing portfolio grow 15.7% y-o-y to Rm30.1bil,” the bank said.

Loans and financing from overseas operations grew 27.3% y-o-y, backed by strong y-o-y growth of 39.3%, 32% and 23.2% in Vietnam, Cambodia and Singapore, respectively.