Hong Leong Bank's Q3 profit up 21.2% on higher income, cost management

PETALING JAYA: Hong Leong Bank Bhd (HLBank) reported a 21.2% rise in net profit to RM690.03 million for the third quarter ended March 31, 2017 against RM569.54 million in the previous corresponding period, driven by higher total income, prudent cost management and strong contribution from its associate company.
Revenue for the quarter under review was up 11.8% to RM1.26 billion to RM1.12 billion.
HLBank's nine-month net profit soared 21.1% to RM2.01 billion from RM1.66 billion, while revenue increased 7.8% to RM3.66 billion from RM3.4 billion.
HLBank said in a filing with the stock exchange that for the first nine months of the year, its gross loans, advances and financing grew 1.6% to RM125.4 billion despite slower credit environment and cautious business sentiments.
"Overall loan growth was led by expansion in our key segments of mortgages and SME whilst partially affected by corporate repayments."
HLBank said its asset quality remains solid with a gross impaired loan ratio and loan impairment coverage ratio of 0.84% and 96%, respectively.
"The bank's capital position remains robust with common equity tier 1, tier 1 and total capital ratios at 12%, 12.7% and 15.3%, respectively, well ahead of regulatory requirements."
HLBank's total income expanded 7.8% to RM3.66 billion on disciplined asset-liability management coupled with higher non-interest income contribution.
Net interest income grew 6.4% to RM2.65 billion, while net interest margin increased 4 basis points to 2.12% on the back of prudent pricing and funding cost management.
Its non-interest income was up 11.7% to RM1.01 billion, attributable to strong contribution from wealth management income and treasury operations.
Looking ahead, HLBank group managing director and CEO Domenic Fuda said the domestic sectors will continue to benefit from spillovers from a healthy external environment, keeping consumption and investment supported despite the anticipation of a review in certain investments and policies under the new government.
"We believe the overall macro fundamentals of the Malaysian economy will remain healthy and any negative market reactions are expected to be transitory in nature. We expect the returns of consumers' and investors' confidence to be positive for demand for loans and deposits."
With stronger contribution from HLBank, Hong Leong Financial Group Bhd's (HLFG) net profit also expanded 20% to RM502.56 million for the third quarter March 31, 2018 versus RM418.75 million in the same quarter a year ago
Its revenue increased 13.1% from RM1.23 billion to RM1.39 billion.
HLFG has proposed to declare an interim dividend of 27 sen per share for the quarter under review.
For the nine-month period, its net profit stood at RM1.45 billion, 16.4% higher than the RM1.25 billion it made in the same period a year ago, with revenue rising 7.2% to RM4.03 billion from RM3.76 billion.
At the noon break, HLBank shares fell 52 sen or 2.7% to RM18.42 on some 1.05 million shares done, while HLFG slipped 18 sen or 0.9% to RM18.64 with some 48,300 shares changing hands.