Hong Leong Bank Bhd, a Malaysian lender controlled by billionaire Quek Leng Chan, reported a 30 per cent increase in second-quarter profit as an economic rebound spurred demand for loans.

Net income climbed to RM291.4 million (US$96 million), or 20.07 sen a share, in the three months ended December 31, from RM224.7 million, or 15.51 sen, a year earlier, the Kuala Lumpur-based bank said in a statement today. Sales gained 16 per cent to RM604 million.

Hong Leong joins banks including Malayan Banking Bhd, Malaysia's biggest lender, in reporting higher earnings after the Southeast Asian economy expanded 7.2 per cent in 2010, fueling demand for loans. That was Malaysia's fastest pace of growth in a decade.

'We remain optimistic of the prospects of the bank,' Group Managing Director Yvonne Chia said in a separate statement. 'The rebound in economic activities offers many participative opportunities for the bank.'

Hong Leong fell 1.2 per cent to RM9.29 at the 5 p.m. close in Kuala Lumpur trading before the earnings announcement, and the FTSE Bursa Malaysia KLCI Index declined 0.2 per cent. The stock has gained 11 per cent in the past year.

The latest quarter was Hong Leong's strongest in the past five financial years in terms of pretax profit, Chia said.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, rose 8 per cent to RM373.4 million. Total loans expanded 16 per cent on an annualized basis in the first six months of the fiscal year. -- Bloomberg