Continuing our Business Transformation journey & profitable growth
Full year profit rose 12% to RM 857 million. Profit was better by 19% quarter-on-quarter. On a year-to-year quarterly basis, profit improved by 20% atRM242 million, reflecting the Bank's sustainable and profitable growth.
Returns on average shareholder funds improved by 130 basis points to 13.8%. Earnings per share was up 16% to 42.4 sen and net asset per share rising to RM3.18 from RM2.95 last year.
Our business transformation plan of investing for long term sustainable growth and prime value creation is yielding results. The year in review had beenfocused on building the growth drivers in our core businesses, namely Personal Financial Services, Wholesale Banking and the Islamic Financial ServicesGroup. We have added new business capabilities to reach and better serve our customers through the roll-out of our new Hong Leong Online, commissioning ofadditional automated machines, upgrade of our full service call centre, new Priority Banking centres and upgrading of IT application infrastructure such asMurex, a treasury trading system.
Strong loan growth momentum
Total assets expanded by 18% with gross loans growing by 10%, outpacing the industry by 1.7 times resulting in market share expanding to 5.2%. This isfueled by strong growth in the consumer financing segment, from Mortgages, Credit Cards and Personal Lending. Commercial assets growth remained flat, inline with industry while the Wealth Management business continued to shape up well, with Assets under Management growing strongly at over 20% since June2006.
Powered by our strong loan growth, the net income was higher at RM 1,768.2 million or 8.4 % better than last year. The improved net interest income,despite the compressing margins in the market place, was on the back of improved interest margin of 2.01% (1.93% last year).
Total other operating income although flat, was higher by 7% if the gains from securities were excluded. The core traditional fee based income continued togrow from areas such as Credit Card commissions, Wealth Management fees, Trade Financing and advisory fees.
Strong Asset quality
Asset quality remained sound. Gross NPL ratio improved significantly to 3.3% from 4.7% last year. Net NPL ratio at 1.9% versus 3.1% last year and this isless than half of the banking industry’s net NPL of 4.1%. Loan loss coverage improved substantially to 86.6% as compared to last year of 65.9% and bankingindustry’s average of 64.8%. HLB continued to be ranked amongst the best bank in terms of asset quality and loan loss coverage.
Strong Deposit Franchise
Total deposits grew 28% to RM 56.7 billion, reflecting our strong deposit franchise with the community and boosted the Bank’s market share of deposits to7.3% from 6.1% previously. Deposits from individuals continued to grow by another 11% while retail current and savings deposits expanded by 15%.
Strong Capital position
The Bank remains highly capitalized at 13.34% and 16.79% for the core capital and total capital ratios respectively. Treasury shares buyback was at 5.1% oftotal issued shares, up from 4.0 % last year.
Upgraded bank rating
Moody’s upgraded our ratings on 4th May 2007. The bank financial strength rating (BFSR) was upgraded to C-. The global local currency deposit ratingassigned was A2/P-1 and the foreign deposit rating was upgraded to A3/P-1 from Baa1/P-2. The foreign currency debt rating for subordinated obligations wasupgraded to A3 from Baa2.
A final dividend of 15.0 sen per share less income tax of 27% has been proposed for the current quarter, bringing the total dividend for the year to 24sen.
For more information, please visit our branches, call Hong Leong Call Centre at 1-800-38-8888 during normal working hours or log on to Hong Leong Online atwww.hlb.com.my
Press Release - 27/08/2007