Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 21): Hong Leong Financial Group Bhd (HLFG) saw its net profit for the second financial quarter ended Dec 31, 2016 (2QFY17) increase by 68.2% to RM443.03 million or 38.7 sen per share from RM263.45 million or 24.5 sen per share in 2QFY16 due mainly to the absence of a mutual separation scheme (MSS) cost booked in December 2015.

In a statement today, HLFG said that excluding the MSS costs, its underlying net profit had risen by 26.9% in 2QFY17, which was due to higher contribution across all its operating divisions, namely its banking division Hong Leong Bank Bhd and insurance division HLA Holdings Sdn Bhd.

Net income for 2QFY17 rose 16.3% to RM1.35 billion from RM1.17 billion a year ago.

The increase in profit for its banking arm was mainly due to higher revenue, lower operating expenses and lower allowance for impairment losses on loans, advances and financing of RM31.7 million.

This was, however, offset by lower share of profit from Bank of Chengdu and Sichuan Jincheng Consumer Finance Joint Venture, and higher allowance for impairment losses from securities of RM500,000.

HLA's increase in profitability was mainly due to lower actuarial reserve provisioning of RM72.7 million, a higher share of profit from associated company and higher revenue.

For the first half of its financial year ended Dec 31, 2016 (1HFY17), HLFG reported a net profit of RM829.22 million or 72.5 sen per share, which was 27.5% higher than its 1HFY16 net profit of RM650.33 million or 61.2 sen per share, due to growth in all three divisions of commercial banking, insurance and investment banking.

Net income for 1HFY17 was 9.7% higher at RM2.54 billion compared to RM2.31 billion a year ago, aided by both loan growth and an improvement in net interest margin (NIM).

HLFG said NIM for its commercial banking division improved by 10 basis points (bps) year on year to 2.05%, despite the 25 bps cut in the overnight policy rate in July 2016.

Gross loans grew by 4.6% year on year to RM123 billion as at Dec 31, 2016, with residential mortgages growing 11.4% to RM54.2 billion and loans to small and medium enterprises growing at 10.5% to RM20.2 billion.

Customer deposits grew by 4.1% to RM151 billion as at Dec 31, 2016, while Hong Leong Bank's loan to deposit ratio remained sound at 81.9% as at Dec 31, 2016.

Gross impaired loan ratios stood at 0.86% as at Dec 31, 2016, while loan loss coverage was at 107%.

HLFG's shares closed up 12 sen (0.8%) to RM15.12 at 12.30pm today, and for a market capitalisation of RM17.41 billion,

 

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