Share Price: RM21.24 | Target Price: RM25.40 | Rating: Buy
Hong Leong Bank achieved RM2.2bn in 6MFY25 net profit (+5.7% yoy), underpinned by a robust 13% growth in operating income. This was a result of: i) a 31.4% jump in non-interest income (through wealth management, bancassurance, Global Markets sales and realizing gains in FVTPL/FVOCI instruments); and ii) an impressive growth of 8.3% in fund-based income, with loan growth at 7.7% yoy. This also yielded a positive +2.5% JAWS and HLBANK was able to maintain its Cost Income Ratio at 38.8% for 6MFY25, below management’s target of ~40%. A very minimal net credit charge (as a result of recoveries) was another driver. Sequentially, NIM saw a slight dip of 2bps qoq to 1.9% due to year end competitive pressure on deposits, after 6 consecutive quarters of recovery, driven by effective Asset-Liability Management (ALM) through deposit cost optimization, building CASA (ratio holding up at 31.3%) and expansion into the more profitable lending segments such as businesses/SMEs.
HLBANK Results Update for Q4 Ending 30/6/24
Research House: Affin Hwang Investment Bank (AHIB)
Analyst: Tan Ei Leen
FY2025 Forecast: Net Profit: RM4,635m | EPS: RM2.26 | DPS: RM0.79