Hong Leong Bank Bhd (HLB) posted higher net profit by 4.9% year-on-year (YoY) to RM1.03 billion for the quarter ended 30 September 2023 (Q1FY24) from RM981 million in the same period last year.
In statement today (Nov 30), it said that this is mainly contributed by strong loan, financing expansion, sustained non-interest income and improved asset quality metrics, coupled with solid contributions from our associates.
“Consequently, we achieved a higher return on equity (ROE) of 12.1% for the first quarter.”
HLB group managing director and chief executive officer Kevin Lam said it commenced the new financial year with a set of encouraging results for Q1FY24.
“(This is) led by sustained loan and financing growth, healthy asset quality, prudent funding and liquidity positions amidst the ongoing external headwinds and volatility in global markets.
“Our gross loans and financing portfolio grew 7.2% year-on-year to RM181.7 billion, led by growth across our mortgage, auto loans, SMEs and commercial banking segments as well as overseas operations.
“In line with our robust credit underwriting process, we continue to closely monitor our asset quality, ending the quarter with a stable gross impaired loan (GIL) ratio of 0.57% and a solid liquidity coverage ratio (LIC) of 164.6%,” he said.
Capital and liquidity positions remained robust with Common Equity Tier 1 (CET 1), Tier 1 and total capital ratios at 12.6%, 13.6% and 15.7% respectively while loans to deposits ratio (LDR) and liquidity coverage ratio (LCR) stood at 85.4% and 137.5% respectively.
Lam said Malaysian economy is expected to expand at a moderate pace of around 4% this year before picking up to grow between 4 and 5% in 2024.
“Sustained domestic demand, underpinned by private sector growth as well as government fiscal spending is expected to be the main anchor with further impetus from an anticipated recovery in exports.
“That said, lagged effects from earlier policy tightening, elevated inflation, and geopolitical uncertainties would be the biggest wildcard exerting downside risk to the world as well as domestic economy.
He said to establish HLB as a highly digital and innovative Asean financial services institution, it is firmly dedicated to execute its strategic priorities to achieve sustainable outcomes.
“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’, customer centricity is our main priority.
Amid the dynamic business landscape, he said HLB is disciplined and focused in its investments and expenditure.
“In our journey of becoming carbon neutral, we will continuously integrate robust ESG practices internally within our own business operations and engage proactively with all our external stakeholders to ensure that we make meaningful progress overtime,” added Lam.
For the total income for Q1FY24, HLB registered RM1.394 billion, driven by expansion in loans/financing portfolio and sustained non-interest income contribution.
“We are encouraged to see net interest income improved 3.4% quarter on quarter (QoQ) to RM1.13 billion due to solid loan/financing growth and effective asset/liability management.
“Correspondingly, net interest margin (NIM) has improved to 1.84% from 1.83% in the precedent quarter, which marks a consecutive second quarter of improvement,” it added.
Operating expenses (opex) for Q1FY24 continued to be prudently managed at RM556 million through strategic cost management initiatives.
“Accordingly, the cost-to-income ratio (CIR) for the first quarter was healthy at 39.9%. Correspondingly, we recorded an operating profit after allowances of RM889 million for Q1FY24, while profit before tax increased 4.7% YoY to RM1.24 billion.”
Meanwhile, non-interest income for Q1FY24 was sustained at RM268 million with a non-interest income ratio of 19.2% supported by higher wealth management income, among others.
