Solid earnings growth for Hong Leong Bank


KUALA LUMPUR: Hong Leong Bank Bhd posted a firm set of financial results in the third quarter ended March 31,2021 (3Q21) and for the nine months period (9MFY21) on sustained loan and financing growth.

In its statement on Thursday, it reported 3Q21 net profit rose by a strong 44.2% to RM771.46mil from RM534.79mil a year ago while revenue increased by 22.6% to RM1.385bil from RM1.13bil. Earnings per share rose to 37.68 sen from 26.13 sen.

Hong Leong Bank said for 9MFY21, net profit rose by 12.8% to RM2.17bil from RM1.92bil in the previous corresponding period. Revenue rose by 15.4% to RM4.13bil from RM3.58bil.

It said in 9MFY21, it sustained return on equity (ROE) above 10% at 10.4%. Gross loans and financing maintained its growth momentum, expanding by 7.3% y-o-y to RM152.8bil as it continued to support clients with their financing needs.

“Asset quality remained robust with gross impaired loan (GIL) ratio stable at 0.53%, significantly lower than industry average, coupled with a solid loans impairment coverage (LIC) ratio of 205%.

“Capital and liquidity positions continue to be healthy with common equity tier 1 (CET 1), Tier 1 and total capital ratios stable at 13.0%, 13.5% and 15.7% respectively while loans to deposits ratio (LDR) and liquidity coverage ratio (LCR) were prudently managed at 83.6% and 147.7% respectively, ” it said.

Hong Leong Bank group managing director and CEO Domenic Fuda (pic, above) said the Malaysian economy has rebounded from a negative growth last year, following the recovery in global economy. This was supported by pent-up demand and continuous accommodative policies.

“Accordingly, the bank continued in our steadfast support of existing and new clients to ensure that they can focus on their recovery efforts, knowing that the bank is here to help.

“The commendable performance of the bank is attributed to the continuing discipline in executing our strategy, prudent cost management, disciplined loan/financing growth and proactive management of clients that are facing cashflow or income disruption because of the pandemic, ” he said.

Elaborating on the financial results, Fuda said net profit after tax for 9MFY21 improved 12.8% y-o-y to RM2.17bil, underpinned by solid top line growth, lower operating expenses and robust contributions from our associates.

“Gross loans and financing expanded by 7.3% y-o-y as global and domestic economic activities rebound driven by improved private and public sectors expenditure, accompanied with funding disbursed to support SMEs and corporate businesses.

“While providing the necessary assistance to customers, we also closely and consistently monitor our asset quality, ending the quarter with a stable GIL ratio of 0.53%. In anticipating further headwinds ahead of the recovery journey, the bank remained prudent and built up additional pre-emptive impairment buffers during the quarter, ” he said.

Hong Leong Bank said total income for 9MFY21 increased by 15.4% y-o-y to RM4.135bil, underpinned by expansion in loan/financing and prudent asset-liability management.

It added net interest income rose for the third consecutive quarter to RM1.09bil in3Q, up 30.6% y-o-y due to its continuing efforts in managing funding cost and loan/financing expansion.

Hence, for 9MFY21, net interest income was 20.4% higher y-o-y at RM3.17bil. Consequently, net interest margin (NIM) improved to 2.20% and 2.12% for 3Q and 9MFY21 respectively.

Non-interest income for 9MFY21 grew 1.6% y-o-y to RM964mil with a corresponding non-interest income ratio of 23.3%, predominantly led by increased wealth management activities and sustained Markets/Treasury gains.

Operating expenses (opex) for 3Q were tightly managed, leading to 9MFY21’s lower opex by 2.4% y-o-y to RM1.54bil, with an improved cost-to-income ratio (CIR) of 37.4%.

Correspondingly, operating profit before allowances for 9MFY21 grew by 29.5% y-o-y to RM2.59bil.

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