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Results Note – Hong Leong Bank (REDUCE, maintain) - Withstanding industry challenges




Affin Hwang Investment Bank Bhd


24 Feb 2013





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1HFY06/13 profit in-line with consensus but slightly ahead of AFFIN Annualized, Hong Leong Bank’s (HLB) 1HFY06/13 net profit of RM985.6m (+31.7% yoy) is in line with street estimates but is slightly ahead of our forecast of RM1,852.2m. The favourable growth was underpinned by a credit recovery (due to FRS 139 adjustments), lower operating expenses and a 34% jump in PBT contribution from 20%-owned Bank of Chengdu’s (10% share of pre-tax profit) from 1HFY06/12. These translated into an annualized ROE of 16.4% for 1HFY06/13 vs. 14.8% in FY06/12, despite of a higher writeback of RM378m in collective allowances in 1HFY06/13 vs. RM253m last year. A higher 1st interim DPS of 15 sen gross (net 11.25 sen) has been proposed in 2QFY06/13 (2QFY06/12: 11 sen gross).

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