Hong Leong Bank ups dividend payout

by **Cals** Fri 30 Aug 2013, 10:50

Hong Leong Bank ups dividend payout
Business & Markets 2013
Written by Esther Lee of theedgemalaysia.com
Friday, 30 August 2013 10:31

KUALA LUMPUR: HONG LEONG BANK BHD [] (HLBB) has proposed a final dividend of 30 sen per share for the financial year ended June 30, 2013 (FY13) bringing the total dividend payable to a record level of 45 sen per share.

A year ago, the company declared 38 sen per share.

The hefty dividend comes on the back of a full year net profit of RM1.86 million for FY13, which is an increase of 6.5% compared with a year ago where net profit came in at RM1.74 billion.

According to the company, the 6.5% increase in net profit was fuelled by high non-interest income contribution, improved operating efficiencies and higher profit contribution from associates.

Non-interest income grew by 25.6% to RM1.07 billion for the year that was derived mainly from treasury operations and led by higher gains from sale of securities, dividend income and positive mark-to-market gains on interest rate derivatives, HLBB chief financial officer Foong Pik Yee told a press conference yesterday.

HLBB group managing director and CEO Tan Kong Khoon said the bank was expecting the non-interest income for the coming year to exceed the 25.6% increase for FY13 despite the currency volatility Southeast Asia countries are facing.

This is because the newly appointed Tan is looking to develop wealth management business of its customers.

“When this kind of [currency] volatility happens, it is true that banks might be a bit more cautious when taking positions.
“On the other side of it, my take is that the wealth management business’ offerings to customers can actually increase,” explained Tan.

The bank’s net interest margin (NIM) remained compressed. It rose marginally to 2.13% in FY13 from 2.12% a year ago.

“Industry NIM has gone down across players, between 5 and 20 basis points among industry players.

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Hong Leong says the increase in profit was fuelled by high non-interest income contribution and improved operating efficiencies.

“In terms of guidance, we continue to target NIM above 2% for FY14. We will continue to face pressure on NIM,” said Foong.

Tan opined that loan growth would be modest going forward. He expects loan growth from the corporate segment to expand while loans to retail consumers to taper slightly due to the issues surrounding the high household debt.

Notably, one of HLBB’s core segment is residential mortgages. That market segment grew by 11.5% to RM34.2 billion for FY13.

As for its international operations, its 20% associate Bank of Chengdu contributed RM264 million, or 11% to HLBB’s profit before tax.

On the listing of Bank of Chengdu, Tan said the paperwork was being done.

“We’re still queuing up [to be listed]. I don’t want to commit to any specific dates [of when it will be listed] because we can’t control the approval timeline. We believe that it will eventually be approved, just a matter of timing.”

This article first appeared in The Edge Financial Daily, on August 30, 2013.

by **peanut** Fri 30 Aug 2013, 22:48

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