HLBB continues to be robust player in retail banking

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KUCHING: Hong Leong Bank Bhd (HLBB) remains one of the strongest players in the retail banking segment.

The research arm of Maybank Investment Bank Bhd (Maybank IB Research) in a report yesterday said the banking group continues to be a solid player in the retail segment.

The research firm is positive on HLBB’s loan traction and the banking group’s strong emphasis on asset quality.

Maybank IB Research noted that HLBB’s gross loan growth picked up pace and grew by nine per cent year-on-year (y-o-y) in the third quarter of financial year 2015 (3QFY15) ended March 2015.

On another note, the research arm of TA Securities Holdings Bhd (TA Research) opined that HLBB is probably one step ahead of many of its banking peers in the information technology (IT) and mobile banking space.

Most of the banking group’s capital expenditure (capex) is dedicated to build IT and mobile related infrastructures, network expansion and to develop new products and services.

It observed the results produced by HLBB have been quite encouraging as the research firm noted the number of active users, transactional users, mobile banking users and financial transaction volumes among HLBB’s customers have increased by some 26 per cent y-o-y, 47 per cent y-o-y, 530 per cent y-o-y and 64 per cent y-o-y respectively.

“With many more innovative digital banking products in the pipeline, management’s strategy targeting the growing middle class and younger generation with technology could help HLBB penetrate new market demographics and address issues such as expanding reach and cushioning falling margins,” TA Research said.

Meanwhile, HLBB in a filing to Bursa Malaysia on May 26 said earnings in 3QFY15 grew by 3.8 per cent to RM519.17 million while revenue advanced by 4.2 per cent y-o-y to RM988.11 million.

For the nine months of financial year 2015 (9MFY15) ended March 2015, net profit gained by 3.4 per cent y-o-y to RM1.62 billion but revenue remained flat at RM3.03 billion.

Zooming into the segmental results of HLBB, the financial institution said the banking group’s retail segment remained the key driver for the group’s loan growth in 3QFY15, expanded by 10.4 per cent y-o-y or 2.8 per cent quarter-on-quarter (q-o-q).

HLBB’s core segment of residential mortgages financing soared to RM43.5 billion, up 15.5 per cent y-o-y, outperformed the industry’s growth.

Transport vehicle loans continued to grow by 3.7 per cent y-o-y to RM18 billion.

Furthermore, business and corporate banking showed encouraging financing momentum with loan growth and financing to small and medium enterprise (SME) increased by 8.6 per cent y-o-y to RM17 billion.

Moreover, s gross impaired loans balance reduced by 21.7 per cent y-o-y with gross impaired loans ratio improved significantly by 35 basis points to record low of 0.89 per cent in 3QFY15.