KUALA LUMPUR, 29 AUGUST 2016 - Hong Leong Financial Group Berhad (“HLFG”) today announced its final results for the financial year ended 30 June 2016 (“FY16”).

  • Excluding Hong Leong Bank Berhad’s (“HLB”) one-off Mutual Separation Scheme (“MSS”) cost of RM172 million, HLFG would have recorded a pretax profit of RM2,737 million in FY16.
  • HLB achieved a loan growth of 6.3% year-on-year (“y-o-y”).
  • Book value per share increased from RM12.48 as at 30 June 2015 to RM13.42 as at 30 June 2016.

Hong Leong Financial Group’s President & Chief Executive Officer, Mr Tan Kong Khoon commented, “The operating environment where we operate, both locally and overseas, is expected to remain challenging. However, HLFG’s core operating earnings have been stable and our underlying financial and credit indicators remain strong. We will continue to optimise our cost structure and remain focused on building sustainable long-term value.”

Commercial Banking

  • HLFG’s Commercial Banking division, HLB recorded a pretax profit of RM2,382 million in FY16. Excluding the effect of the MSS, HLB would have recorded a pretax profit of RM2,554 million in FY16.
  • Non-interest income improved by RM149 million to RM1,055 million in FY16, mainly due to higher treasury profits and forex gains. Non-interest income to total income ratio improved to 25.3% in FY16 from 22.3% in FY15.
  • Gross loans grew by 6.3% y-o-y to RM121 billion as at 30 June 2016. Residential mortgages increased 13.7% y-o-y to RM51.5 billion. Loans to SMEs continued to grow at a healthy pace, increasing 8.0% y-o-y to RM19.2 billion.
  • Customer deposits grew by 5.9% y-o-y to RM148.5 billion as at 30 June 2016. Individual deposits make up 54.8% of total deposits, leveraging on HLB’s strong retail franchise.
  • HLB’s Loan/Deposit ratio remained sound at 81.2% as at 30 June 2016, among the lowest in the industry amidst an environment of increasing competition for deposits.
  • Asset quality continued to be strong with the Gross Impaired Loans Ratio improving to 0.79% as at 30 June 2016, which is amongst the lowest in the industry. Loan loss coverage remained well covered at 120%.  
  • Cost/Income ratio excluding MSS cost was 45.8% in FY16, at the lower end of the industry range.  The positive effects of the MSS exercise have begun to show in HLB’s cost structure in the second half of FY16.
  • Capital position remained robust, especially after the recent completion of HLB’s RM3 billion Rights Issue, with Common Equity Tier 1, Tier 1 and Total Capital Ratios at 12.7%, 13.1% and 14.7% respectively as at 30 June 2016.

Insurance

  • HLA Holdings Sdn Bhd, HLFG’s insurance division, recorded a pretax profit of RM197.4 million in FY16.
  • Hong Leong Assurance Bhd’s (“HLA”) gross premiums grew by 7.5% y-o-y to RM2,787 million in FY16 and importantly, new business premiums within our target segment of regular premiums increased by 17.2% y-o-y. 
  • HLA’s management expense ratio was 5.9% in FY16, remaining amongst the lowest in the industry.
  • The focus remains on growing and improving the quality of HLA’s premium base, increasing profitability drivers as well as growth across multiple distribution channels.

Investment Banking

  • The Investment Banking division under Hong Leong Capital Berhad, recorded a pretax profit of RM64.5 million in FY16.