KUALA LUMPUR: Hong Leong Bank Bhd recorded a net profit of RM2.38bil in the nine months period ended March 31, 2022, which was 9.69% higher compared with RM2.17bil in the same period in 2021.
In a statement, the bank said the improved result was underpinned by solid loan and financing growth, effective cost management, lower loan impairment allowances and robust associate contribution.
Over the same period, the bank reported revenue of RM4.1bil, which represented a marginal decrease from RM4.13bil in the comparative period due to lower non-interest income contribution negating the higher net interest income.
For the third quarter alone, Hong Leong recorded a net profit of RM784.8mil and revenue of RM1.35bil as compared with net profit of RM771.47mil and revenue of RM1.39bil in 3QFY21, representing an increase of 1.73% and a decrease of 2.72% respectively.
According to Hong Leong, net interest income in 9MFY22 was up 9.1% year-on-year (y-o-y) to RM3.46bil on solid loan and financing growth and funding cost optimisation in the recent third quarter.
Net interest margin stood at 2.16% for the period ended March 31.
"Gross loans and financing expanded by 6.3% y-o-y, led by the continuing expansion in our mortgage, SMEs and corporate businesses portfolio, in line with the overall trajectory of economic growth.
"While we are steadfast in extending the necessary financial assistance to our
clients, we consistently aim to maintain strong asset quality across all loan portfolios through our robust credit framework.
"Consequently, we have attained an overall gross impaired loan (GIL) ratio of 0.48%, coupled with sufficient loan impairment coverage buffer of 217.8%," said Hong Leong Bank group managing director and CEO Domenic Fuda in a statement.
Meanwhile non-interest income for 9MFY22 narrowed to RM640mil with a non-interest income ratio of 15.6%, due mainly to lower revaluation and disposal gains on investment securities.
The bank said this was alleviated by the stronger wealth management income stream and higher card fees, in line with the recovery in retail customer spend.
On funding and liquidity positions, Hong Leong said loan-to=deposit ratio and loan-to-credit ratio were comfortable at 83.5% and 137.1% respectively.
Customer deposits for the nine months period rose 5.4% y-o-y to RM190.4bil while current account savings account (Casa) expanded 11.7% to RM63bil, translating to a Casa ratio 33.1%, up from 31.2% in the same period last year.
The bank’s funding base remained stable as it was bolstered by an established individual deposit portfolio, which grew 8% y-o-y to RM99.6bil, representing an individual deposit mix ratio of 52.3%.
The capital position of the bank remained healthy with CET 1, Tier 1 and Total Capital ratios at 12.7%,13.3% and 15.4% respectively as at March 31, 2022.
"The evolving business backdrop will undoubtedly present us with new growth opportunities, which we will strive to capture by swiftly adapting to the constantly changing circumstances, and being disciplined in our investments and expenditures that will deliver sustainable outcomes to our stakeholders.
"The bank is also committed to promoting and integrating ESG considerations into our business practices as we believe sustainable banking practices will serve as the foundation to our continued competitive advantage in the long term," said Fuda.
Over at the bank's holding company, Hong Leong Financial Group Bhd's net profit was RM1.78bil, 5.06% higher than RM1.69bil in the same period in the previous year on the back of higher contribution from Hong Leong Bank.
However, insurance unit HLA Holdings Sdn Bhd and investment banking arm Hong Leong Capital Bhd recorded lower contributions.
Revenue for the group came in at RM4.61bil, 1.95% lower from the previous year.
HLFG president and CEO Tan Kong Khoon said the Malaysian outlook has improved although there remains uncertainty and downside risks from inflationary pressures, persistent global supply chain disruptions, fallout from the armed conflict in Europe and a slowdown in China’s economy.
"Against this uncertain global backdrop, the group continues to deliver steady performance in 9MFY22.
"Bank Negara Malaysia’s recent 25 basis points increase in the overnight policy rate may be mildly positive to our commercial banking business but the upward inflation trend would most likely put some pressure on our operating cost that calls for more stringent cost discipline going forward," he said.