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Hong Leong Bank posts 15.6% lower earnings in Q3

29 May 2020 / 14:07 H.

PETALING JAYA: Hong Leong Bank Bhd’s net profit for the third quarter ended March 31, 2020 fell 15.6% to RM534.79 million from RM633.90 million a year ago due to higher allowance for written back of impairment losses on loans, advances and financing.

Its revenue dropped 3.2% to RM1.13 billion against RM1.17 billion previously.

For the nine months period, the bank’s net profit dropped 5.1% to RM1.93 billion from RM2.03 billion corresponding period last year with the absence of a one-off gain from divestment of joint venture.

Its revenue jumped 0.7% to RM3.58 billion against RM3.56 billion perviously.

Gross loans and financing expanded by 6.6% year-on-year (y-o-y) to RM142.4 billion, ahead of the industry growth rate. Solid asset quality preserved with gross impaired loan ratio below 1%.

Its capital position remain robust with common equity tier 1, tier 1 and total capital ratios at 12.9%, 13.5% and 15.7% respectively.

Group managing director and CEO Domenic Fuda said despite ongoing headwinds from the Covid-19 pandemic, global oil price crash and Overnight Policy Rate (OPR) cuts by Bank Negara Malaysia (BNM), it remained resilient as the bank’s performance was upheld by sustained loan growth momentum, prudent cost management and stable contributions from our associates.

Core total income for 9M’20 expanded 3.3% y-o-y to RM3,582 million, underpinned by healthy 6.6% y-o-y expansion in loan/financing book, despite pressure from the two OPR cuts in January 2020 and March 2020, which resulted in net interest margin (NIM) for the nine months being moderated to 1.97%.

“Excluding the impact from the OPR cuts, our NIM would have been stable at 2.02%. Impact to NIM for the Q3’20 was well contained within 20bps quarter-on-quarter (q-o-q) despite the combined 50bps cut, as a result of pre-emptive strategies that were in place,” he said in a statement today.

Hong Leong Bank and Hong Leong Islamic Bank continues to extend support to SMEs via BNM’s Special Relief Fund where, as of May 18, 2020, HLB had approved RM1.64 billion for over 2,000 SMEs spanning across sectors ranging from wholesale and retail trade, manufacturing, construction to transport, storage and communication.

“We have provided flexibility to our customers by giving them the option to continue paying whatever amount that they feel they can afford and in whatever frequency they are comfortable with, whether it be weekly, monthly, or otherwise. Subsequently, this allows our customers to manage their cashflow and, at the same time, ensures a smooth transition to normal repayment commitments come October 2020.”

While corporate customers are not eligible for the automatic moratorium, it has been talking to its customer base and have extended, on a case-by-case basis, financial support as and when needed.

“Although credit cardholders did not fall under the automatic moratorium, we extended the option of converting their balances into a term loan/financing for a tenure of three years at an effective interest/profit rate of 13% per annum to lessen their financial burden. Thus far, we are encouraged by the level of engagement and resultant feedback we have had from our retail, SME and corporate clients. While the situation remains fluid and the economic pick-up uncertain, engaging with our clients will provide the opportunity of dialogue to alleviate the effects of this pandemic on their cashflow.” he added.

Despite the challenging operating environment ahead, Hong Leong Bank remains committed in its vision to build a highly digital and innovative Asean financial services institution.

“We will continue to provide the necessary support and collaborate closely with our customers to make sure they are able to return to a state of financial normalcy as economies adjust to the fight against Covid-19 and the ‘new norm’ operating environment.”

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