HLB posts RM981mil Q1 net profit

Fuda says the outlook remains at risk of macro headwinds, including rising global inflation.

KUALA LUMPUR: Coming off a set of positive earnings in its first quarter for the financial year 2023 (1Q23), ended Sept 30, 2022, Hong Leong Bank Bhd (HLB) managing director and chief executive officer Domenic Fuda says the outlook remains at risk of macro headwinds, including rising global inflation.

“The global economic outlook remains susceptible to a potential fallout from aggressive monetary policy tightening, persistent inflation, financial market volatility, a slowdown in the China economy and rising geopolitical risks,” Fuda said, while announcing the bank’s 1Q23 results.

“In tandem with the rest of the world, spillover effects from protracted inflationary pressures, which are expected to impinge on real consumption, would likely dampen growth prospects.”

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 were 47.91 sen, compared with 41.91 sen in the comparative quarter.

Meanwhile, revenue increased 8.7% to RM1.5bil, owing to higher net interest income and consistent non-interest income contributions.

For the quarter under review, net interest income was 9.9% higher year-on-year (y-o-y) at RM1.23bil as a result of solid loan and financing growth and effective asset and liability management.

Correspondingly, the bank’s net interest margin improved by 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% y-o-y to RM268mil, with a non-interest income ratio of 17.9%.

According to the bank’s CEO, gross loans and financing expanded 8.8% y-o-y to RM169.5bil, on the back of expansion in the mortgage, small and medium enterprises, and commercial banking segments, as well as overseas operations.

He added that the overall gross impaired loan ratio was stable at 0.49%, with adequate loan impairment coverage of 212.2%.

Customer deposits for 1Q23 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%.

The 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 of 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, HLB’s holding company, Hong Leong Financial Group Bhd (HLFG) posted a net profit of RM681.74mil, versus a net profit of RM640.56mil in 1Q22.

This rise came on the back of a higher contribution from HLB, while the bank’s insurance division, HLA Holdings Sdn Bhd, and the investment banking division, Hong Leong Capital Bhd, recorded lower contributions.

HLFG’s revenue rose to RM1.65bil compared to RM1.56bil in the previous corresponding quarter.

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