KUALA LUMPUR (Nov 17): Hong Leong Financial Group Bhd (HLFG) posted a 1.3% drop in net profit for the first financial quarter ended Sept 30, 2015 (1QFY16) to RM386.88 million or 36.9 sen a share from RM392.16 million or 37.4 sen a share a year ago, mainly due to lower contribution from its banking and investment banking division.
The group's first-quarter revenue however rose 5.8% to RM1.15 billion from RM1.08 billion in 1QFY15.
It also declared a first interim dividend of 13 sen per share for the financial year ending June 30, 2016 (FY16), payable on Dec 23.
In a statement today, HLFG said during the quarter, its commercial banking division registered lower earnings with Hong Leong Bank Bhd's (HLB) pre-tax profit down 11.2% year-on-year at RM625 million.
The decline in HLB earnings was due to lower net interest income, higher allowance for loan impairment allowances and higher operating expenses.
However, this was offset by higher pre-tax profits by its insurance division, HLA Holdings Sdn Bhd which grew 81.1% year-on-year to RM73.7 million in 1QFY16. The increase was mainly due to lower actuarial reserves arising from higher interest rates.
The group's book value per share increased to RM13.15 as at Sept 30 from RM12.48 as at June 30.
"Barring unforeseen circumstances, the group is expected to perform satisfactorily for the current financial year," HLFG said.
HLFG noted that its operating environment, both locally and overseas, is expected to remain challenging.
"However, HLFG's overall earnings have been stable and it continues to see progress in the underlying longer-term key business indicators. HLFG will continue to optimise its cost structure and remain focused on building sustainable long-term shareholders' value," it added.
As at 4.28pm, HLFG shares were traded up 0.74% to RM13.54 with 94,500 shares done. Its market capitalisation stood at RM15.63 billion.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)