WIKIFX REPORT: Hong Leong Bank records net profit of RM1.6bil in 1H, declares 18c div

KUALA LUMPUR: Hong Leong Bank Bhd

recorded a net profit of RM1.6bil for the six months ended Dec 31, 2021, which was a 14.2% improvement over RM1.4bil in the previous corresponding period.

The group reported revenue of RM2.75bil during the period, which was little changed over the same period in 2020 as higher net interest income was offset by lower non-interest income contribution.

In the second quarter alone, the group posted a net profit of RM738.59mil, which was 10.11% higher year-on-year (y-o-y) on 2.1% lower revenue of RM1.37bil.

“The second quarter of our financial year saw the reopening of the economy and subsequent pickup in economic activities which correspondingly resulted in more demand from clients for loans/financing, as such, we were able to maintain the growth momentum we have seen over the past few quarters,” said Hong Leong Bank group managing director and CEO Domenic Fuda in a statement.

The group declared an interim dividend of 18 sen per share with enment date on March 15, 2022, and payable on March 25, 2022.

Meanwhile, Fuda said he was optimistic over the trajectory of the global recovery given the high rate of vaccinations in Malaysia and globally.

Additionally, accommodative fiscal and monetary policy measures in place are expected to help support the recovery, although some jurisdictions are expected to tighten monitory policy in coming quarters.

“We expect such tightening to be gradual so as not to negatively impact the global recovery underway,” he added.

Over the first half of the financial year, the group recorded net interest income of RM2.23bil, which translated into a net interest margin of 2.19%.

Non-interest income however was compressed at RM454mil with a non-interest income ratio of 16.5% due to lower revaluation and disposal gains of financial assets.

However, the bank reported stronger wealth management income and higher card fees backed by a recovery in retail customer spend.

Operating expenses for 1HFY22 was 1.2% lower y-o-y at RM1.02bil while cost-to-income ratio stood at 37.1%.

Operating profit before allowance during the six months was higher y-o-y at RM1.73bil.

Meanwhile, the bank's gross loans, advances and financing grew 6.7% y-o-y to RM160.1bil due mainly to an expansion in mortgages, SME and commercial banking.

Domestic loans financing expanded 5.7% ahead of the industry growth rate of 4.5%.

On liquidity, the bank's loans-to-deposit ratio stood at 83.7% while the loans-to-credit ratio improved to 149.5%.

Customer deposits meanwhile rose 6.8% to RM188.6bil with current account, savings account (Casa) growth of 18.6% to RM62.3bil, raising the Casa ratio to 33.1%.

The bank's gross impaired loans ratio was 0.46% while loan impairment coverage stood at 250.6% as at end-2021.

The capital position of the bank remained healthy with CET 1, Tier 1 and total capital ratios at 13.1%, 13.6% and 15.7% respectively as at end-2021.

Meanwhile, Hong Leong Financial Group (HLFG) posted a six months net profit of RM1.2bil, a 7.7% jump over RM1.11bil in the same period in 2020 due to higher contribution from Hong Leong Bank while insurance division HLA Holdings Sdn Bhd and investment banking arm Hong Leong Capital Bhd

recorded lower contributions.

In a separate statement, HLFG said net income from the Islamic banking and Takaful businesses for the period was RM484mil, a 1.1% drop y-o-y.

The group declared an interim dividend of 15 sen per share with enment fate on March 15, 2022, and payable on March 30, 2022.

With our increasing vaccination and booster rates, we anticipate the Malaysian economy will remain stable supported by expansion in global demand, higher private sector expenditure amid improvements in the labour market, and continued accommodative policy support.

“The group shall remain vigilant and continue our strong focus on risk management with a view that Malaysia will be able to maintain a balanced approach to public health management whilst supporting economic growth in 2022,” said HLFG president and CEO Tan Kong Khoon.