Hong Leong Islamic Bank Berhad (the “Bank”) today announced its results for the financial year ended 30 June 2013.
Net profit after tax of Hong Leong Islamic Bank for the financial year ended 30 June 2013 (“FY13”) stands at RM226.7million [an increase of 62.0% over the previous financial year based on pro forma accounts with the assumption that the merger had occurred as at 1 July 2011 (“Pro Forma Basis”)].
Total net income for FY13 grew by 31.9% year-on-year on pro forma basis to RM489.0 million.
Gross Financing grew RM1.3 billion, or 10.2% year-on-year to RM13.7 billion.
Customer Deposits at RM17.3 billion expanded by 5.8% year-on-year.
Profitability and Efficiency
The Bank registered a Net Profit After Tax of RM226.7 million for year ended 30 June 2013, an increase of 62.0% over the previous financial year based on pro forma accounts, on the back of the growth in Total Net Income by 31.9% to RM489 million.
The growth in income is in line with the expansion in financing business and higher contribution from Non-Financing Income activities coupled with an improvement in asset quality.
Return on Equity (ROE) and Return on Assets (ROA) for FY13 strengthened to 18.0% (FY12:10.5%) and 1.0% (FY12: 0.7%) respectively, backed by the higher profitability during the financial year.
Cost-Income Ratio was at 43.1%, increase from 37.7% last year in reflection of various initiatives undertaken in enhancing the market presence of the bank particularly in new market segments during the year.
Gross Financing grew by RM1.3 billion or 10.2% to RM13.7 billion, mainly contributed by mortgage (expanded by RM1.1 billion or 20%) and business financing (by RM0.3 billion or 16%).
Deposits & Liquidity
Customer Deposits increased by 5.8% to RM17.2 billion.
Deposit growth was contributed by the growth in term deposits and treasury based deposits (comprising NIDC and short term corporate placement).
In term of exposure of deposits by Shariah contracts, non Mudharabah based deposits closed at RM11.4 billion, representing growth of 130%, reflecting the Group’s increased focus on Islamic Banking.
Liquidity position remains healthy with Financing to Deposits (FD) ratio at 79.2% and Current & Saving Account (CASA) ratio at 24.8%,
Asset Quality and Capital
HLISB continued to maintain good asset quality levels with Gross Impaired Financing and Advances Ratio improving from 1.79% in FY12 to 1.50% in FY13.
With effect from 1 Jan 2013, the Bank adopted the new Basel III capital adequacy guidelines under the BNM’s Capital Adequacy Framework for Islamic Banks (Capital Components).
Common Equity Tier 1 (CET1) capital ratio and Total Capital Ratio stood at 10.7% and 13.8% respectively, well above the minimum regulatory requirement and remained strong supportive of business growth strategies.
The Capital Ratio is after incorporating proposed final dividend for year ended 30 June 2013 of RM42.5 million.
HLISB maintains a positive outlook for the Islamic Banking industry. The newly enforced Islamic Financial Services Act (IFSA) by BNM is expected to further strengthen and grow Islamic finance domestically but also beyond sovereign boundaries. Improved Shariah governance and clear regulatory structure and oversight create a conducive environment for Islamic bank to operate. To ensure continued growth and sustainability Islamic banks shall remain optimistic and look beyond traditional banking activities. At the same time further innovation in digital banking is crucial for the bank to remain competitive and relevant to its customer. Going forward, developing new customer base while maintaining its strength in wholesale and investment banking is also the way forward in enhancing the bank non financing income.