Hong Leong Bank Q1 net profit jumps 17.8% on top line growth, cost control

PETALING JAYA: Hong Leong Bank Bhd (HLB) net profit for the first quarter ended Sep 30, 2017 jumped 17.8% on robust top line growth, coupled with prudent cost control and healthy contributions from overseas associates.
The group made a net profit of RM638.0 million for the quarter under review, compared with RM542.6 million for the same quarter in 2016.
This was achieved on 7.5% higher revenue of RM1.2 billion for the quarter ended Sep 30, 2017, compared with RM1.1 billion for the same quarter in 2016.

Gross loan and financing stood at RM124.9 billion led by growth in domestic retail, SME and international operations.
Total income growth for the first quarter was underpinned by continued expansion in net interest income as well as sustained strong non-interest income contribution.
Domestic loans to the retail segment continued to be a driver of the bank’s loan growth, expanding 4.2% year-on-year amidst cautious consumer backdrop.
Residential mortgages grew by 9.9% year-on-year ahead of industry to RM58.0 billion supported by a healthy loan pipeline while transport vehicle loans were lower at RM17.3 billion, following still weak automobile industry sales.
Loans and financing to SME continued to grow at a healthy pace of 6.5% year-on-year to RM20.6 billion, representing 16.5% of the bank’s loan base. Loans and financing for international operations rose 10.9% year-on-year to RM6.6 billion.
International operations accounted for 21.5% of the bank’s pre-tax profit in Q1FY18, led by steady recovery from Bank of Chengdu (BOCD) during the quarter. Profit contribution from BOCD rebounded, improving 65.6% year on year to RM148 million in Q1FY18 and contributing 18.9% of the bank’s pre-tax profit.
Capital position remained roust with CET-1, Tier-1 and Total Capital ratios at 12.9%, 13.3% and 15.3% respectively.
HLB Group Managing Director and CEO Domenic Fuda called the results a promising start to the year.
“Whilst the business environment has been more moderate during the quarter, we remain confident that with our strategic priorities in place we should continue to see further operational improvements and business growth going forward," he said.
Its funding and liquidity positions remain stable and prudent, with loans-to-deposits ratio and liquidity coverage ratio of 81.8% and 119%.
Customer deposits for Q1FY18 increased by 2.3% year-on-year to RM152.7 billion as current account and savings account (CASA) grew at a stronger pace of 11.5% year on year to RM41.0 billion, achieving an improved CASA mix of 26.8%.
The bank continued to maintain a stable funding base, with its individual deposit expanding to RM84.7 billion, representing an industry leading mix of 55.5%.
The group's share price was down 18 sen to close at RM15.14, with some 3.5 million shares changing hands.