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Results Note – Hong Leong Bank (ADD, maintain) - In-line with estimates, withstanding industry challenges




Affin Hwang Investment Bank Bhd


29 Aug 2013





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FY06/13 profit in-line with AFFIN and consensus Hong Leong Bank reported its full year FY06/13 results, with a net profit of RM1,856.3m (+6.5% yoy) vs. our forecast of RM1,852.2m and consensus' RM1,916m. The group has also proposed a higher final interim dividend of 30 sen gross, equivalent to a net DPS of 22.5 sen. Total DPS proposed for the year of 45 sen gross (at a payout ratio of 32.7% vs. 29.4% in FY06/12), was +18.4% higher yoy. Nonetheless, as the group migrates to a single-tier dividend system, the group will maintain a payout ratio of circa 30% and hence we adjust our dividend forecast from 28.5 sen to 32.2-38 sen for FY06/14-16. HLB has continued to withstand industry headwinds and achieved a robust ROE of 15% (in-line with our expectation) on the back of robust overseas contribution (profits up 11.1% yoy, contributed 13.2% share of pre-tax profit) but more subdued operating income growth of 3.3% as loan growth remains modest at +7.3% yoy.

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