Hong Leong Bank registers 1Q net profit of RM1.03bil on strong loans growth

KUALA LUMPUR: Hong Leong Bank Bhd kickstarted its new financial year with a set of encouraging results, underpinned by growth in its loans and financing portfolio.

"Amid ongoing external headwinds and volatility in global markets, we remain vigilant and resolute in executing our strategic priorities and driving our continued business expansion," said group managing director and CEO Kevin Lam in a statement.

"We will continue our efforts in elevating our customer experience by providing customer-centric banking solutions that anchor on our brand promise of 'Built Around You'."

In the quarter ended Sept 30, 2023 (1QFY24), Hong Leong Bank recorded a net profit of RM1.03bil, an improvement from RM981.41mil in the same 2022 quarter, representing an increase in earnings per share to 50.26 sen from 47.91 sen previously.

The banking group reported slightly lower revenue of RM1.39bil during the quarter under review from RM1.5bil in the previous comparative quarter.

Consequently, the group registered a higher return on equity of 12.1% for the quarter, attributed to strong loan and financing expansion, sustained non-interest income and improved asset quality metrics, coupled with solid contributions from associates.

Total income in 1QFY24 was RM1.39bil with net interest income improving 3.4% quarter-on-quarter (q-o-q) to RM1.13bil and net interest margin rising to 1.84% from 1.83% in the preceding quarter.

Non-interest income in 1QFY24 was sustained at RM268mil with a non-interest income ratio of 19.2%.

Operating expenses, meanwhile, stood at RM556mil while cost-to-income ratio remained healthy at 39.9%.

During the quarter, the group's gross loans and financing portfolio grew 7.2% to RM181.7bil led by growth across our mortgage, auto loans, SMEs and commercial banking segments as well as overseas operations.

Customer deposits rose 6% year-on-year (y-o-y) to RM209.2bil with current account savings account (Casa) standing at RM61.9bil.

Meanwhile, the bank's parent company, Hong Leong Financial Group Bhd (HLFG), announced its own net profit of RM741.65mil for the quarter, up from RM669.47mil in the previous corresponding quarter.

Basic earnings per share in 1QFY24 rose to 65.4 sen from 59 sen in the comparative quarter.

Revenue, meanwhile, was lower at RM1.57bil compared to RM1.6bil in the previous corresponding quarter.

HLFG president and CEO Tan Kong Khoon said the positive performance is a testament to the resilience of its operating companies despite the turbulent economic environment posed by elevated interest rates and volatile market conditions.

"Guided by our strategic priorities, the group will continue to invest in our human capital, accelerate our digitalisation transformation while keeping a sharp focus on risk management and further integrate Environmental, Social and Governance (ESG) considerations into the way we conduct our business to deliver sustainable business performance and long-term value for all

stakeholders," he said in a statement.

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