KUCHING: Hong Leong Bank Bhd’s (HLBB) net profit for the second quarter of financial year 2014 (2QFY14) went up 2.4 per cent year-on-year (y-o-y) to RM520 million.
As for the first half of financial year 2014 (1HFY14), the banking group’s earnings increased eight per cent y-o-y to RM1.065 billion.
At the same time, HLBB’s turnover for 1HFY14 grew 3.86 per cent y-o-y to RM2.08 billion while its revenue for 2QFY14 increased five per cent y-o-y to RM1.055 billion.
Hong Leong Bank’s group managing director and chief executive officer Tan Kong Khoon in a statement yesterday said, “Despite the challenging environment, we continue to achieve a commendable set of results for the first half of FY14, supported by interest income and fee income growth as well as higher profit contribution from associates.
“All key business drivers remained robust with improved growth momentum, reflecting our strong underlying operations.
“In particular, gross loans for the group surpassed the RM100 billion mark,” he said.
He noted that for the latest financial performance, the bank continued to deliver sustainable shareholder value creation with return on equity (ROE) of 15.9 per cent and earnings per share of 60 sen for 1HFY14.
In the meantime, the banking group said its gross loan and financing growth has been broad based with 8.2 per cent y-o-y growth or 3.5 per cent for the six months ended December 31, 2013 to RM100.6 billion.
HLBB said its net interest income was higher by 4.2 per cent to RM1.51 billion driven by expansion in loan book and well-managed cost of fund.
The bank added its net interest margin registered at 2.04 per cent for 1HFY14 and 2.03 per cent for 2QFY14 respectively.
It noted non-interest income improved to RM572 million, contributed by higher fee income and foreign exchange gains which was partially offset by lower gains from sale of securities and mark-to-market securities.
HLBB said its non-interest income ratio was at 27.5 per cent for 1HFY14.
Moreover, HLBB observed that its gross impaired loans ratio improved further to another record low of 1.33 per cent as at 1HFY14 through proactive credit and recovery management.
Furthermore, it noted the bank’s capital level remained solid with common equity tier 1 (CET-1) tier-1 and total capital ratios stood at 10.2 per cent, 11.8 per cent and 14.4 per cent respectively.
On a regional front, HLBB said profit contribution from international operations further enhanced to 14.9 per cent of the group’s pre-tax profit for 1HFY14, with 34 per cent y-o-y growth.
The banking group pointed out that its 20 per cent associate, Bank of Chengdu in China remained the key contributor with profit contribution growing by 33.2 per cent y-o-y to RM172 million, represented 12.6 per cent of the group’s profit before tax.
Apart from that, HLBB said its Cambodian operation through Hong Leong Bank Cambodia Plc (HLBCP) has achieved encouraging results.
It noted as at December 31, 2013, HLBCP gross loan stood at RM33 million, a growth of 268 per cent quarter-on-quarter (q-o-q) while deposit base expanded to RM72 million from RM5 million in September 30, 2013.
Meanwhile, in the last quarter, the group also established a representative office in Nanjing, China and has commenced operations effective November 27, 2013.
The bank said its representative office in Nanjing was set up to support the group’s future expansion in China.
In conjunction with the release of the bank’s quarterly financial results, HLBB also proposed an interim dividend of 15 sen per share for the half-year interim results.
Going forward, Tan said, “Despite signs of improving external conditions, domestic demand could see slight moderation as concerns over price escalation and recent regulators’ pre-emptive measures may contain consumer spending, translating into a more modest loan growth in Malaysia.
gHowever, we are optimistic that the underlying fundamentals of the Malaysian economy will support continued business growth. g(Therefore), the group will remain cautious and strive for sustainable profitability. “We will continue to build high performance business drivers and strengthen the franchise through innovative solutions and customer analytics.”