Sustainable, profitable growth continues
The Hong Leong Bank Group delivered stronger net profits of RM 447 million for the nine months ended 31 st March 2007, up 10% year-on-year against thecorresponding period last year.
Shareholder value creation strengthened as earnings per share attributable to shareholders for the nine months rose 15% to 30.6 sen (corresponding periodlast year: 26.6 sen). Return on shareholder funds also improved to 13.4% for the nine months (corresponding period last year: 12.3%).
Quality top-line growth momentum
The customer acquisition pace for quality top-line growth continued into the third quarter. Net loans, advances and financing stood at RM 30.5 billion(corresponding: RM27.2 billion), up 12% year-on-year.
Consumer financing in the chosen segments remained strong, with growth in loans to households outpacing that of industry by almost 2 times. This waspowered by Mortgages (up 13% over the 9-month period) and Credit Cards (up 30% over the 9-month period). Personal lending as a new segment continued togrow well with customers. Commercial assets growth was however flat, in line with industry.
The Wealth Management business is shaping up well, with Assets under Management growing a robust 26% since June 2006.
On the back of stronger key revenue drivers in place, net interest income grew 20% for the 9-month period.
Although other operating income appeared flat, when unrealised losses on the revaluation of securities were excluded, Non-Interest Income grew a healthy14% over the 9 months. The non-interest-income growth was broad-based, with key expansions from the Credit Card business, Wealth Management, Transactionincome, as well as from Forex and Trade activities.
The deposits business is a core franchise strength, with deposits from customers at RM 49.5 billion (corresponding: RM 43.7 billion), up 13% year-on-year.
Asset quality a Group mantra
The quality of loan assets continued to improve with the gross NPL ratio declining to 4.1% (4.7% last Jun 06) and net NPL ratio at 2.2% (3.1% last Jun 06).Meanwhile, the loan loss coverage ratio has improved to 83.1% (66% last Jun 06).
Strong balance sheet & capital position
Total assets grew 15.5% year-on-year to RM 72.8 billion (corresponding: RM 63.0 billion). The Bank remains highly capitalised at 13.15% and 16.72% for thecore capital and total capital ratios respectively.
Upgraded bank rating
Moody's announced on 4 th May 2007, an improved rating for Hong Leong Bank. The bank financial strength rating (BFSR) was upgraded to C- from D+. TheGlobal Local Currency Deposit Ratings assigned was A2/P-1. The foreign currency deposit rating was upgraded to A3/P-1 from Baa1/P-2. The foreign currencydebt rating for subordinated obligations was upgraded to A3 from Baa2.
There is no recommended dividend for this quarter.
Press Release - 10/05/2007