Categories: EconomyNews

Hong Leong Bank’s 2Q20 profit rises 2.1%, declares 16 sen dividend

The increase is due to strong top-line growth, cost management and associates’ contributions


HONG Leong Bank Bhd’s profit rose 2.1% year-on-year (YoY) to RM701.81 million in the second quarter ended Dec 31, 2019 (2Q20), from RM687.25 million in the same period the year before on strong top-line growth, cost management and associates’ contributions.

Earnings per share for the quarter increased to 34.29 sen from 33.59 sen the year before, the group said in a statement yesterday.

Quarterly revenue jumped 8.4% to RM1.24 billion versus RM1.14 billion in the previous corresponding quarter.

The bank has declared an interim dividend of 16 sen, to be paid on March 26, 2020.

Pre-tax profit increased 4.1% YoY to RM856.97 million from RM823.2 million a year earlier, mainly due to higher net income of RM95.4 million and higher share of profit from associate companies of RM33.8 million.

However, this was mitigated by higher operating expenses of RM16.2 million, allowance for impairment losses on loans, advances and financing of RM77.5 million and allowance for impairment losses on financial investments and other financial assets of RM1.7 million.

For the six months ended Dec 31, 2019 (1H20), net profit slipped 0.3% YoY to RM1.39 billion from RM1.39 billion previously, while revenue increased 2.5% to RM2.45 billion from RM2.39 billion in 1H19.

Operating expenses for the current period stood at RM1.05 billion, leading to a cost-to-income ratio of 42.8%.

Net interest income improved 5.5% to RM912 million in 2Q20. Accordingly, net interest income for 1H20 was 4.5% higher at RM1.79 billion.

Subsequently, net interest margin stood at 2.03% and 2.04% for 1H20 and 2Q20 respectively.

Core non-interest income for the six months improved 12.8% YoY to RM659 million, contributed by higher fee income and gains from treasury operations.

Loan growth came in at 7.3% YoY, bringing gross loans, advances and financing to RM141.3 billion as at end-2019, mainly on the business banking and mortgages segments, as well as overseas operations.

Domestic loans expanded 6.8% YoY, with loans to the retail segment increasing 6.6% YoY and contributing 71% of total loans.

Residential mortgages jumped 9.8% YoY to RM70.6 billion, underpinned by a healthy loan pipeline, while transport vehicle loans portfolio remained stable at RM17.4 billion.

Business enterprises loans increased 4.8% YoY to RM40.4 billion, although loans and financing to small and medium enterprises (SMEs) were marginally lower at RM20.8 billion due to re-tagging of SME accounts in accordance with Bank Negara Malaysia’s new guidelines on SME definition.

Loans and financing from overseas operations increased 16.7% YoY, attributed to 10.1%, 33.2% and 43.3% growth in Singapore, Cambodia and Vietnam respectively.

Customer deposits rose 2.7% YoY to RM167 billion, while the bank’s gross impaired loan ratio stood at 0.84%.

The bank’s focus on growing strategic segments of retail and corporate loans, including SMEs, has seen results in new initiatives such as renewable energy (RE) financing.

“Efforts towards growing this sector have been positive as evidenced by the over RM300 million in financing which had been approved in 1H20,” the bank said.

The lender’s parent, Hong Leong Financial Group Bhd, saw earnings rise 4.4% to RM502.96 million in 2Q20 from RM481.55 million the year before, while revenue expanded 8.8% to RM1.36 billion from RM1.25 billion previously.


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