Highlights

AmInvest Research Reports

Author: AmInvest   |   Latest post: Mon, 25 Jan 2021, 1:06 PM

 

Hong Leong Bank - NIM to continue to recover from reprising of liabilities

Author:   |    Publish date:


Investment Highlights

  • We maintain our BUY call om Hong Leong Bank (HLBB) with a revised fair value of RM19.30/share from RM16.80/share after rolling forward our valuation to FY22. This is based on a higher FY22 ROE of 10.0%, leading to a P/BV of 1.2x. No changes to our estimates.
  • 1QFY21 net profit of RM729mil, grew 5.9% YoY with a strong total income growth of 11.0% YoY partially offset by conservative provisions of RM238mil. Earnings were within expectations, making up 26.6% and 26.9% of our and consensus estimate respectively.
  • Loan growth accelerated to 6.8% YoY (4QFY20: 6.1% YoY). Domestic loans growth of 6.8% YoY outpaced the industry’s 4.4% YoY, supported by mortgages (residential property), SMEs, commercial banking and expansion of overseas’ markets loans.
  • Underlying NIM in 1QFY21 rose by 8bps QoQ to 2.00% due to lower funding cost from the repricing of deposits after the recent OPR cuts. There is still room for upside in NIM from repricing of liabilities ahead.
  • HLBB’s NOII in 1Q21 was decent, underpinned by a strong treasury income (disposal gains of FVOCI securities). FVOCI reserves at RM578mil stayed strong for further monetization of gain in securities when the opportunity arises.
  • CI ratio for 1QFY21 was 38.6% with opex staying flat.
  • 1QFY21 share of profits from its 18.0% stake in Bank of Chengdu (BOC) and the remaining 12.0% in Sichuan Jincheng Consumer Finance Limited’s (now both associate companies) continued to be strong at RM167mil (15.3% YoY). It accounted for 18.8% of the group’s underlying 1QFY21 PBT.
  • The group’s GIL ratio declined to a low of 0.48% (4QFY20: 0.61%). Credit cost rose to 0.28% in 1QFY21 (1Q20: -0.03%) with further top-up in provisions.
  • 8% of the group’s loans under assistance. Its payment relief assistance programme (PRAP) of RM11.8bil has been extended to 44,000 customers (78% to retail and 22% to SME and corporate borrowers).

Source: AmInvest Research - 30 Nov 2020

Share this
Labels: HLBANK

Related Stocks

Chart Stock Name Last Change Volume 
HLBANK 17.24 -0.32 (1.82%) 779,800 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View candlestick stock charts with Technical indicators
MQ Affiliate
Be rewarded by being an MQ Affiliate
 
 

275  849  537  455 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 DNEX 0.30+0.04 
 DNEX-WD 0.06+0.015 
 BIOHLDG 0.295-0.005 
 XOX 0.08-0.01 
 PHB 0.0250.00 
 XOX-WC 0.020.00 
 LUSTER 0.195+0.01 
 VIZIONE 0.225-0.045 
 QES 0.365-0.015 
 AT 0.175-0.005 

FEATURED POSTS

1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!

TOP ARTICLES

1. Tan Sri Lim: “Being sick is being abnormal.” TOPGLOV allows only 2 paid sick leave p.a. LHL please make a police report if what you says is true! gloveharicut
2. Intco, Top Glove, Supermax - A Quick Comparison Trying to Make Sense Bursa Investments
3. Jaks Resources - Final Update :- Jaks Hai Duong Power Plant achieved FULL COD ! DK
4. Bargain hunting lifts GLOVEs share prices, say analyst, fund manager as situation remains 'volatile' gloveharicut
5. Eurocham: No mention of lockdown after Feb 4 in meeting with Miti save malaysia!
6. CIMB: FREIGHT is trading at a 60.9% & 30.8% discount to its local & regional peers gloveharicut
7. Health Ministry says govt not keen to implement MCO for a long period save malaysia!
8. Supermax record profit must prevail - Koon Yew Yin Koon Yew Yin's Blog
PARTNERS & BROKERS