PETALING JAYA: Hong Leong Bank Bhd turned in a 17.7% jump in net profit to RM858.25mil in the first quarter (Q1) of its financial year ending June 30, 2022 (FY22), underpinned by topline growth, disciplined expense management, lower loan impairment allowances and robust associate contributions.
The group reported a revenue of RM1.38bil in the quarter, which was slightly higher than RM1.35bil in the previous corresponding quarter.
“Continued execution of our strategic priorities has provided us a strong foundation to begin the new financial year with an encouraging set of results for Q1 of FY22, underpinned by an effective cost management structure, continued discipline in our investments and loan/financing portfolio growth,” said Hong Leong Bank group managing director and CEO Domenic Fuda in a statement yesterday.
Over the quarter, the bank reported a net interest income of RM1.12bil, which was up 13% year-on-year) (y-o-y), while net interest margin rose to 2.13%.
However, non-interest income was compressed at RM259mil with a non-interest income ratio of 18.8%, mainly attributable to losses arising from the sale of financial assets.
There were lower operating expenses during the quarter due to cost-optimisation strategies, which led to an improved cost-to-income ratio of 36.8%.
On loans and financing, the group reported 5.2% growth y-o-y, driven by positive business sentiment and economic recovery, as well as expansion in SMEs and corporate businesses.
It said its gross impairment ratio stood at 0.48%.
Meanwhile, customer deposits in Q1 of FY22 rose 4.9% with current account savings account (Casa) growth at 16.9% y-o-y, lifting the Casa ratio to 32.3%
The bank added that its capital position remained healthy and supportive with CET 1, Tier 1 and Total Capital ratios at 13.0%, 13.5% and 15.7% respectively as at Sept 30, 2021.
Moving forward, Fuda said there will be growth opportunities in the new normal environment.
“We will continue to be disciplined in our investments and expenditure to ensure a cost structure that enables us to invest in growth opportunities that will deliver sustainable outcomes to our stakeholders.
“With the increasing importance of sustainability for financial institutions, the bank has plans underway to play its part in promoting and integrating environmental, social and governance or ESG considerations in its business operations and practices.
“This would help the bank in sustaining its competitive edge,” he said.
Meanwhile, Hong Leong Financial Group Bhd reported a net profit of RM640.56mil in Q1 of FY22, which was a 9.1% improvement y-o-y, due to positive contributions from Hong Leong Bank and its insurance division, HLA Holdings Sdn Bhd.
The investment banking division, Hong Leong Capital Bhd, posted a lower contribution mainly due to lower stock market activity.
“The group continued to deliver commendable performance across its operating businesses in Q1 of FY22 despite navigating a challenging business environment impacted by the resurgence of Covid-19 cases and the reimplementation of movement restrictions.
“We anticipate Malaysia’s economy to recover progressively supported by the reopening of economic activities, high vaccination rates and accommodative policy stance amidst rising inflationary pressures from global supply chain issues and high commodity prices,” said Hong Leong Financial Group president and CEO Tan Kong Khoon.