Hong Leong Bank first quarter earnings up 10.6%

PETALING JAYA: Hong Leong Bank Bhd’s net profit for the first quarter ended Sept 30 rose 10.63% to RM706.92 million from RM638.97 million a year ago, driven by growth in noninterest income, prudent cost control and lower impairment allowances.

During the quarter, non-interest income surged 35.4% year-on-year to RM397 million to a higher non-interest income ratio of 31.8%, as a result of improved performance in treasury market activities and gain on divestment of joint venture.

Revenue for the quarter rose 5.97% to RM1.25 billion from RM1.18 billion a year ago driven mainly by robust non-interest income contribution and expansion in loan book.

Net interest income was lower at RM852 million due to rising funding cost from intensifying deposits competition over the past one year. Consequently, net interest margin (NIM) for the quarter stood at 2%, 5bps lower than the precedent quarter.

Cost-to-income ratio improved during the quarter to 42%, while operating profit grew 7.8% year-on-year to RM724 million from RM671 million a year ago.

Gross loans, advances and financing grew 4% year-on-year to RM129.8 billion led by growth in mortgages and business segments, and overseas operations.

Overseas operations saw loan expansion of 3.8% year-on-year and 4.7% quarter-onquarter, led by Cambodia and Vietnam.

Loans-to-deposits ratio stood at 81.7% while liquidity coverage ratio stood at 117%. Customer deposits increased 4% year-onyear to RM158.8 billion mainly from fixed deposits while CASA ratio stood at 25%.

Group managing director and CEO Domenic Fuda said business momentum has gained pace with gross loans and financing expanding 4% year-on-year despite persistent challenges in the operating environment.

“We maintained a very solid asset quality position with GIL ratio of 0.81%, whilst loan impairment coverage (LIC) ratio at 128% is one of the strongest in the industry post adoption of MFRS9,” he said in a statement.

The bank’s capital position remains strong even after the adoption of MFRS9, with CET 1, Tier 1 and total capital ratios at 12.4%, 13.1% and 16.1% respectively as at end-September.