HLB Q3 2005 Pre-Tax Profit Up 41% To RM565million BM

Hong Leong Bank Berhad (HLB) is pleased to announce a 41% growth in pre-tax profit for its third quarter ending 31 March 2005. The pre-tax profit grew from RM401 million to RM565 million for the same corresponding period.

This strong pre-tax profit improvement was primarily due to increase in non-interest income which was higher by 61%, as well as lower loan loss provision which was favorably lower by 60%.

According to Ms Yvonne Chia, Group Managing Director of Hong Leong Bank “Personal Financial Services segment continued to provide the growth impetus with increased sales in financial planning, wealth management and Islamic banking products. Gross loans, advances and financing saw a positive growth of 11% on an annualized basis from June 2004, primarily due to increase in mortgages, credit card and hire purchase portfolios."

The Bank’s loan to deposit ratio stood at 66.6%. With continued trust from customers, the Bank’s deposit franchise remains strong and grew by 9% on an annualized basis. In March 2005, the Bank successfully issued US$ 110 million of floating rate certificate of deposits, which was earmarked to fund its Singapore and Hong Kong branches growth.

We continued to push for stronger fee earnings, with the Bank’s fee to total income ratio improving to 24.8% for the 9 months ending 31st March 2005, versus 16.2% in the corresponding period. The higher fee earnings were achieved from our Treasury, Wealth Management, Business Banking and Singapore branch fee income areas. We recorded a very promising growth of 61% from RM170 million to RM274 million over the corresponding 9 months.

On its Islamic banking segment, the Bank saw a 27% rise in revenue to RM98 million compared to RM77 million over the corresponding 9 months. This was fueled by strong financing growth, principally from financing for cars and business and also from strong mobilization of deposits.

Business banking continues to be challenging with strong competition but the Bank continues to achieve an increase in trade financing.

The Bank’s asset quality continued to improve with the net non-performing loans to total loans ratio reducing to 4.7% from 5.4% as at June 2004. This was mainly due to the emphasis on prudent credit management and intensive collection efforts.

The bank is well capitalized with a risk-weighted capital ratio of 16.8%, significantly above the minimum statutory requirement of 8%. As a measure to improve capital efficiency, the Bank has to-date bought back 42,883,100 shares or RM 229 million, representing a total of 2.71% of the issued and paid-up capital.

Earning per share for the reporting quarter is at 8.75 sen (basic as well as fully diluted) or 34.5 sen when annualized (June 04 - 24.5 sen). It is not the policy to pay a dividend for this quarter.

Barring unforeseen circumstances, HLB is optimistic of delivering better results in its financial year ending 30th June 2005.

Press Release - 9/5/2005