Hong Leong Bank’s 3Q net profit up marginally by 1.73% to RM784.8m on lower allowance for impairment losses

KUALA LUMPUR (May 30): Hong Leong Bank Bhd (HLB) said Monday (May 30) that its net profit for the third quarter ended March 31, 2022 (3QFY22) rose 1.73% to RM784.8 million from RM771.47 million a year ago due to lower allowance for impairment losses on loans, advances and financing as well as higher share of profit from an associated company.

Its revenue for 3QFY22, however, fell 2.8% to RM1.35 billion from RM1.39 billion, its filing to Bursa Malaysia showed.

The group said the higher profit was due to lower allowance for impairment losses on loans, advances and financing of RM62.9 million and higher share of profit from the associated company of RM70.7 million.

This, however, was mitigated by lower net income of RM37.7 million, higher operating expenses of RM5.6 million and allowance for impairment losses on financial investments and other assets of RM300,000.

For the first nine months ended March 31, 2022 (9MFY22), the group’s net profit rose 9.69% to RM2.38 billion from RM2.17 billion while its revenue slipped 0.86% RM4.1 billion from RM4.13 billion.

The group did not declare any dividend for the latest quarter.

“As we transition to the endemic phase, the strong vaccination rates continue to provide the necessary impetus for Malaysia’s economic recovery to pre-pandemic levels. Despite risks from elevated inflation, Covid-19 and geopolitical-related uncertainties, the recovery prospects will be underpinned by robust external demand, domestic private consumption and international borders reopening.

“Aligned with the pickup in economic activities, the bank should see demand for loan/financing from clients remaining robust over coming quarters,” HLB group managing director and chief executive officer Domenic Fuda said in a Monday statement.

“Within this backdrop of an economic recovery, we have been agile and adaptive in capturing new growth opportunities and executing our strategic priorities to deliver sustainable outcomes to our stakeholders,” he added.

“Accordingly, we have achieved a resilient set of results for 9MFY22 as net profit after tax improved 9.7% year-on-year [y-o-y] to RM2.38 billion on the back of solid loan/financing growth, effective cost management, lower loan impairment allowances and robust contributions from our associates,” he noted.

According to him, the group’s gross loans and financing expanded by 6.3% y-o-y, led by the continuing expansion in its mortgage, small and medium enterprises (SMEs) and corporate businesses portfolio, in line with the overall trajectory of economic growth.

“While we are steadfast in extending the necessary financial assistance to our clients, we consistently aim to maintain strong asset quality across all loan portfolios through our robust credit framework. Consequently, we have attained an overall GIL ratio of 0.48%, coupled with sufficient loan impairment coverage buffer of 217.8%,” he said.

At noon break, HLB rose 14 sen or 0.67% to RM21.14, valuing the group at RM45.52 billion.