25 percent increase in profits for Hong Leong Bank
(26 February 2013 – Malaysia) Malaysia’s Hong Leong Bank’s net profit is up by 25 percent to US$317 million (A$308 million) for the first-half of 2013.
The result was driven by higher operating efficiency (operating expenses declined by 10.6 percent year-year), higher non-interest income (35.4 percent y-y growth) and impairment write-back of 7 basis points of total loans versus a charge of 2bps in 1HFY12.
The broader trend of improved cost efficiency is intact as the cost-to-income ratio declined to 44.6 percent, from 52 percent in 1HFY12. Management expects further improvement as branch network rationalisation progresses.
The loan-to-deposit (LTD) ratio inched up to 75 percent, from 74 percent at end-1QFY13, helping to stabilise NIMs. Encouragingly, management noted that it recognises the importance of maintaining margins and is willing to tolerate a higher LTD ratio going forward.
Loan growth was a bit disappointing at just 7 percent y-y, due to a weak trade financing segment. Management believes that growth will pick up in the coming quarters as customers start to drawdown on the approved loans and utilisation rates improve on existing facilities.
Asset quality remained robust (gross NPLs decline to 1.5 percent, from 1.6 percent the previous quarter).
Management lowered its loan growth guidance to 'high-single digits' from the original 10-12 percent. It attributed this to the lower demand for trade financing in the face of a weak external sector. NIM is expected to stay at current levels, while over the longer term, credit costs are expected to normalise at 20-25bps.
The broader trend of improved cost efficiency is intact as the cost-to-income ratio declined to 44.6 percent, from 52 percent in 1HFY12. Management expects further improvement as branch network rationalisation progresses.
The loan-to-deposit (LTD) ratio inched up to 75 percent, from 74 percent at end-1QFY13, helping to stabilise NIMs. Encouragingly, management noted that it recognises the importance of maintaining margins and is willing to tolerate a higher LTD ratio going forward.
Loan growth was a bit disappointing at just 7 percent y-y, due to a weak trade financing segment. Management believes that growth will pick up in the coming quarters as customers start to drawdown on the approved loans and utilisation rates improve on existing facilities.
Asset quality remained robust (gross NPLs decline to 1.5 percent, from 1.6 percent the previous quarter).
Management lowered its loan growth guidance to 'high-single digits' from the original 10-12 percent. It attributed this to the lower demand for trade financing in the face of a weak external sector. NIM is expected to stay at current levels, while over the longer term, credit costs are expected to normalise at 20-25bps.
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