Hong Leong’s 3Q19 earnings decrease 8% YoY due to lower net income


Hong Leong Bank Bhd’s (HLB) net profit for the third quarter ended March 31, 2019 (3Q19), declined 8% year-on-year (YoY) to RM634 million from RM690 million a year ago due to lower net income.

The company said in a statement yesterday the decrease in net profit was mitigated by lower operating expenses, lower allowance for impairments and higher share of profit from associated company.

In a filing to Bursa Malaysia Bhd yesterday, HLB reported its revenue for the quarter slipped 7% to RM1.17 billion from RM1.26 billion in 3Q18.

Moreover, its earnings per share (EPS) was lower at 30.98 sen compared to 33.73 sen a year ago.

For the nine months ended March 31, 2019 (9MFY19), the company’s net profit rose to RM2.03 billion from RM2.01 billion previously, attributable to the healthy expansion in its loan book.

Revenue for 9MFY19 decreased to RM3.56 billion compared to RM3.66 billion a year ago. The company also reported its gross loans and financing expanded by 6.5% YoY to RM133.6 billion, driven by growth in the business banking and mortgages segments.

The bank continues to maintain its solid asset quality with a gross impaired loan ratio of 0.8% amid sound loan growth, while loan impairment coverage ratio remains prudent at 116% post the Malaysian Financial Reporting Standards 9.

HLB group MD and CEO Domenic Fuda said despite ongoing economic challenges, loan growth momentum for the company accelerated to a healthy 6.5% YoY expansion to RM133.6 billion, while continuing to uphold its solid asset quality — signifying the bank’s commitment towards delivering on sustainable results to its stakeholders.

“This positive performance is reflective of HLB’s commitment in further enhancing product offerings, such as the recent launch of its co-branded Emirates HLB cards aimed at accelerating growth in its payments business by leveraging on the growing Malaysian travel segment,” he said in a statement.

In terms of its business outlook, Fuda commented that HLB remains steadfast and focused on executing its digital strategy to strengthen the company’s digital offerings and transform its products and services to further enhance customer experience.

Meanwhile, Hong Leong Financial Group Bhd’s (HLFG) reported its net profit for 3Q19 fell 8% YoY to RM463.4 million from RM502.6 million, due to lower contribution across all operating divisions.

The company’s revenue for the quarter dropped RM1.31 billion from RM1.39 billion, while its EPS also dropped to 40.5 sen compared to 43.9 sen a year ago.

HLFG recorded a profit after tax of RM2.2 billion for the period, whereas net income from its Islamic banking and takaful businesses for the period was RM580.9 million, an increase of 10.6%.

The financial group noted in a statement that its efforts on Islamic financial services continues to show results, where the contribution of the Islamic businesses to HLFG’s profit before tax (excluding one-offs) improved from 10.9% to 13.5%.

The book value per share also increased from RM16.21 as at Dec 31, 2018, to RM16.70 as at March 31, 2019.

Additionally, HLFG announced in a Bursa filing yesterday a second interim dividend of 0.29 sen per share, to be paid on June 26.

In terms of commercial banking, the group’s profit after tax increased 0.8% YoY to RM2.03 billion, supported by a healthy loan growth — albeit amid funding cost pressure during the period and less contribution from Treasury market activities.

In the meantime, HLFG’s insurance division recorded a profit after tax of RM185.9 million in 9MFY19, a decrease of 6% YoY — mainly due to lower premiums and weak market sentiments.

The investment banking division under Hong Leong Capital Bhd noted a profit after tax of RM62.5 million in 9MFY19, slightly higher than last year, due to a backdrop of lower Bursa volumes and slower corporate activities.

HLFG president and CEO Tan Kong Khoon said in a separate statement that despite the challenging business environment, the group continues to show steady results across all its core businesses.

“We remain committed to diligently execute our business and digital strategies to build long-term sustainable value for our shareholders,” he said.