KUALA LUMPUR: Hong Leong Bank Bhd (HLBB) is in a good position to ride out tough times in a volatile market, its group managing director Tan Kong Khoon said yesterday.

Tan said the bank posted a "fairly good set of results" for the financial year ended June 30, 2015 (FY15) despite a challenging operating environment, and is in good stead to weather the tougher challenges which lie in wait.

“We foresee rough waters ahead ... but we are in a very good position. We have a very strong, robust loan-to-deposit ratio and our loan growth momentum is going in the right direction, meeting industry growth,” he told a news conference to announce the bank's fourth quarter (4QFY15) and FY15 full-year results yesterday.

As at June 30, 2015, HLBB's loan-to-deposit ratio stood at 80.9%, while gross loans and financing expanded by 8.9% year-on-year (y-o-y) in 4QFY15 to RM113.4 billion

HLBB posted 14.4% growth in net profit to RM614.85 million in 4QFY15 from RM537.45 million on improved net interest income, impairment write-back reflective of improved asset quality, and profit contribution from associates.

Revenue grew 3.4% to RM1.04 billion in 4QFY15 from RM1.01 billion in 4QFY14.

The bank also proposed a final dividend of 26 sen per share for FY15, bringing total dividends for the year to 41 sen per share.

For FY15, HLBB’s net profit grew 6.3% to RM2.23 billion from RM2.1 billion in FY14, while revenue grew a marginal 0.7% to RM4.07 billion from RM4.04 billion in FY14.

Moving forward, Tan said the bank is confident of meeting the industry's target for loan growth of 8% to 9% in FY16.

“For our loan-to-deposit ratio, we want to keep it under 82%,” he said.

Tan also said the bank is open to acquisitions but is prudent on its expansion plans, adding that it will consider opening more branches in high-growth countries like Cambodia if its branches are able to monetise their presence there.

The bank has five branches in Cambodia and four in Vietnam as at end-FY15.

Tan also said the bank will be focusing on its growth areas of transaction and wealth management.

HLBB chief financial officer Foong Pik Yee said the bank is targeting to keep its return on assets at the present 1.2% level.

She also said capital expenditure for FY16 will be maintained at RM250 million to RM300 million, with most of the funds geared towards digitisation and improvement of the bank's services.

HLBB shares closed up 0.78% to RM12.92 yesterday, with a market capitalisation of RM23.24 billion.

This article first appeared in digitaledge Daily, on August 27, 2015.