Update Hong Leong Bank 1Q profit rises 14% to RM544m

by **Cals** Tue 26 Nov 2013, 16:32

Update Hong Leong Bank 1Q profit rises 14% to RM544m

Business & Markets 2013

Written by Chong Jin Hun of theedgemalaysia.com

Tuesday, 26 November 2013 13:43

KUALA LUMPUR (Nov 26): Hong Leong Bank Bhd reported a 14% rise in first quarter net profit from a year earlier. Growth came on higher interest income, lower allowance for bad loans, and write-back of securities' impairment losses.

In a statement to the exchange today, Hong Leong Bank said net profit rose to RM544.49 million in the first quarter ended September 30, 2013 (1QFY14) from RM477.63 million. Revenue was higher at RM1.03 billion versus RM1 billion.

"The increase in pre-tax profit was mainly due to higher net income of RM26.9 million, lower allowance for impairment losses on loans, advances and financing of RM3.3 million, higher write back of impairment losses from securities of RM14.1 million and higher share of profit from Bank of Chengdu and joint venture totaling RM29.8 million," Hong Leong Bank said.

Hong Leong Bank said lower Islamic banking income, and higher operating expenses however curbed profit.

Looking ahead, the group said it will expand its regional operations while "seeking organic transformational growth opportunities".

Hong Leong Bank said it will strive for sustainable profitability via a universal banking model.

Hong Leong Bank's 1QFY14 net profit compares to Alliance Research Sdn Bhd's and consensus full-year forecast of RM2.12 billion and RM2.02 billion respectively.

Alliance vice president for equity research Cheah King Yoong wrote in a note today that the firm "expects no major surprises for the group’s (Hong Leong Bank) 1QFY14 results".

"Nonetheless, with Hong Leong Bank's credit cost normalising, it will be interesting to see whether the group will be able to drive its topline growth, and improve its cost structure further, to sustain its earnings growth," Cheah said.

Alliance has a "buy" call for Hong Leong Bank shares with a target price of RM15.60, according to Cheah.

Hong Leong Bank shares settled flat at RM14.18 at 12.30pm