KUALA LUMPUR: Coming off a set of positive earnings in its first financial quarter ended Sept 30, 2022, Hong Leong Bank Bhd
managing director and CEO Domenic Fuda said the outlook remains at risk of macro headwinds, including rising global inflation.
"The global economic outlook remains susceptible to potential fallout from aggressive monetary policy tightening, persistent inflation, financial market volatility, a slowdown in the China economy, and rising geopolitical risks.
"In tandem with the rest of the world, spillover effect from protracted inflationary pressures, which are expected to impinge on real consumption, would likely dampen growth prospects," he added, while announcing the bank's recent quarterly results.
During the quarter under review, the bank recorded a net profit of RM981.41mil, which was 14.35% higher than in the previous corresponding quarter.
The group's earnings per share was 47.91 sen as compared with 41.91 sen in the comparative quarter.
Revenue meanwhile was up 8.7% to RM1.5bil, driven by an expansion in net interest income and sustained non-interest income contribution.
For 1QFY23, net interest income was 9.9% higher y-o-y at RM1.23bil as a result of solid loan and financing growth and effective asset/liability management.
Correspondingly, the bank's net interest margin improved five basis points y-o-y.
A higher fee income and sustained performance in treasury market activities also boosted the bank's non-interest income by 3.4% year-on-year (y-o-y) to RM268mil, with a non-interest income ratio of 17.9%.
According to Fuda, gross loans, advances and financing expanded 8.8% y-o-y to RM169.5bil, on the back of expansion in the mortgage, SME and commercial banking segments as well as overseas operations.
He added that overall gross impaired loan (GIL) ratio was stable at 0.49%, with adequate loan impairment coverage (LIC) of 212.2%.
Customer deposits for 1QFY23 rose 7.7% to RM197.4bil with current account savings account (Casa) growth at 7.7% y-o-y to RM63.7bil and a Casa ratio of 32.3%.
Capital position of the bank remained strong with CET 1, Tier 1 and Total Capital ratios at 12.9%, 14% and 16.1% respectively as at Sept 30, 2022.
In international operations, the Bank of Chengdu's contribution rose 22.6% to RM259.9mil, representing 21.9% of the bank's pre-tax profit.
Meanwhile, Hong Leong Bank holding company Hong Leong Financial Group Bhd (HLFG) posted a net profit of RM681.74mil in 1QFY23, which compared to a net profit of RM640.56mil in 1QFY22, due to higher contribution from Hong Leong Bank while the insurance division, HLA Holdings Sdn Bhd, and the investment banking division, Hong Leong Capital Bhd, recorded lower contributions.
The group's revenue rose to RM1.65bil compared to RM1.56bil in the previous corresponding quarter.
"Looking forward, Malaysia’s economy is expected to remain resilient on the back of heightened economic activities supported by robust export growth, improved performance in the services sector and rebound in manufacturing sectors.
"However, the recovery momentum continues to face multiple macro-economic and external headwinds ranging from elevated inflationary pressures, the effects of a strong US dollar and the risk of a global economic recession.
"With many factors at play, we shall be vigilant against these risks and are cautiously optimistic that the Malaysian economy will remain resilient amidst an uncertain and volatile global backdrop," said HLFG president and CEO Tan Kong Khoon in a statement.
