KUALA LUMPUR (Aug 30): Hong Leong Bank Bhd’s net profit for the fourth quarter ended June 30, 2021 (4QFY21) rose 21.09% to RM689.48 million, from RM569.42 million a year ago, mainly due to higher share of profit from associated companies and net income.

Its quarterly revenue also grew 11% to RM1.33 billion from RM1.2 billion, its filing to Bursa Malaysia showed.

The group has declared a final dividend of 35.22 sen per share, bringing the total dividend to 50 sen per share for the financial year ended June 30, 2021 (FY21), with a dividend payout ratio of 36%.

The group said the increase in profit was mainly due to higher net income of RM135.6 million and higher share of profit from associated companies of RM54.8 million.

However, this was mitigated by higher operating expenses of RM11.5 million and higher allowance for impairment losses on loans, advances and financing of RM3 million, it added.

For FY21, the group’s net profit increased by 14.7% to RM2.86 billion, from RM2.49 billion a year earlier, while its full-year revenue climbed 14.4% to RM5.47 billion, from RM4.78 billion.

Operating expenses for FY21 continue to be managed, leading to 1.2% year-on-year (y-o-y) lower opex of RM2.08 billion, with cost-to-income ratio standing at 38%. 

Hong Leong Bank’s managing director and chief executive officer Domenic Fuda said in a statement that the group’s financial year ended amid the reimplementation of the movement control order, reintroduced to combat the resurgence of Covid-19 positive cases, impacting the economic recovery momentum.

“Progress in the rate of vaccination remains key to the economic recovery in Malaysia and globally, as it is expected to help contain the rate and severity of infections, leading to the eventual opening of all economic sectors and social activities, followed by cross-border activities in the future,” he said.

He added the group is cautiously optimistic that progress in this regard is underway and hence the local and global economies should enter 2022 with better recovery traction.

In the meantime, the group has been and remains steadfast in helping customers through this difficult period, enabling them to focus on their recovery efforts, he said.

For FY21, the group’s total income recorded a 14.4% y-o-y growth to RM5.47 billion, on the back of loan or financing expansion and prudent asset-liability management.

Net interest income for FY21 was up y-o-y to RM4.31 billion, resulting in a 26-basis-point increase in net interest margin for FY21 to 2.14%. This is mainly attributed to the group’s continuing efforts in managing funding cost, loan or financing expansion and the absence of modification loss that was registered in the same period last year.

Meanwhile, the group’s gross loans and financing maintained its growth momentum, as it continued to help clients with their financial needs, expanding by 6.8% y-o-y to RM155.8 billion, with asset quality remaining solid, reflected by a record gross impaired loan ratio at 0.46%.

The group’s capital and liquidity positions continue to be healthy with Common Equity Tier 1, Tier 1 and Total Capital ratios at 13.6%, 14.1% and 16.2% respectively while loans-to-deposits ratio and liquidity coverage ratio improved to 83.9% and 145.3% respectively.

On business outlook, Fuda said the economic environment remains challenging, with some economies seeing steady recovery although signs of plateauing have emerged.

“Continued policy support and vaccine progress should help cushion uncertainties surrounding the pandemic and the resurging cases caused by new variants,” he added.  

Domestically, containment measures pose downside risks to growth outlook, but favourable vaccination rates and growth in Malaysia’s major trading partners, plus accommodative policy measures, should underpin a reasonable level of growth going into 2022, he said.

“We remained steadfast in supporting existing and new clients over the course of the past year, to ensure that they can focus on their recovery efforts.

“In this new normal environment, it will undoubtedly present us with growth opportunities which we will endeavour to capture by being agile and responsive to the changing landscape,” he said.

Concurrently, the group will continue to be disciplined in its investments and expenditure to ensure a cost structure that enables the group to invest in growth opportunities that will deliver sustainable outcomes to its stakeholders, he said.

At noon break, Hong Leong Bank added 20 sen or 1.05% to RM19.20, valuing the group at RM41.19 billion.