PETALING JAYA: Hong Leong Bank Bhd (HLB) saw its net profit rise 1.7% to RM636.45 million for the fourth quarter (Q4) ended June 30, 2019 against RM626.01 million in the previous corresponding period, thanks to the expansion in loan book.
Revenue for the quarter, however, slipped 0.7% to RM1.17 billion from RM1.18 billion.
The bank has proposed to declare a final dividend of 34 sen per share, bringing the total dividend to 50 sen per share for FY2019 compared with 48 sen last year.
HLB’s full-year net profit expanded 1% to RM2.66 billion from RM2.64 billion a year ago, while revenue declined 2.4% to RM4.73 billion from RM4.84 billion.
The group’s gross loans, advances and financing increased 6.6% to RM137.6 billion.
“During the financial year, we approved loans to SMEs to the value of RM3.7 billion, an increase of over 100% from prior year. For residential properties, we approved over RM7.0 billion of loans to properties valued RM500,000 or below (an increase of 26% over prior year), helping more Malaysians getting their own home.”
However, the rate cut in May resulted in a drop in its net interest margin (NIM) for the year to 1.96%.
“Even so, we remain sanguine as impact to NIM for Q4 was managed within 11 basis points (bps) quarter-on-quarter despite a 25bps cut in OPR in early May 2019. This is achieved through a mix of strategic and tactical decisions that leaves us confident moving forward that we can improve our NIM, especially off the back of such commendable growth in our loan book without compromising asset quality.”
HLBank’s total income for FY19 came in at RM4.73 billion, mainly supported by the healthy growth in loan book. Net interest income moderated lower to RM3.39 billion due to the still elevated funding cost pressure during the year and the rate cut earlier.
Non-interest income for FY19 stood at RM1.33 billion, with non-interest income ratio higher at 28.2% versus 27.8% the prior year., attributed to higher credit card fees, foreign exchange gains and gains on the divestment of joint venture, mitigated by weaker performance in treasury market activities.
The bank said it continues to adopt a prudent approach towards liquidity management with a prudent loan-to-deposit ratio of 84.4%. Liquidity coverage ratio stood at 134% as at June 30, 2019, well in excess of regulatory requirement.
Customer deposits for FY19 grew 3.6% to RM163.1 billion, predominantly attributed to solid growth in business deposits of 6.8%.
HLBank’s common equity tier 1, tier 1 and total capital ratios stood at 13.1%, 14.1% and 16.3% respectively.
Gtoup managing director and CEO Domenic Fuda said a healthy labour market and the anticipation of a pick-up in investment spending following the revival of numerous major infrastructure projects are expected to help underpin domestic demand.
“This shall help negate some of the fallouts from a softer external environment possibly still mired in spillover effects from the geopolitical tensions currently impacting global trade.”
He said the bank will continue to see growth opportunities in the coming year and will maintain the efforts to revamp its cost structure through a pervasive digital transformation.
At the noon break, HLB’s share price dropped 16 sen or 0.97% to RM16.32 on 296,900 shares done.
source https://www.thesundaily.my/business/hong-leong-bank-declares-34-sen-final-dividend-despite-flat-earnings-IJ1308659
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