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Categories
| Hong Leong Bank on the lookout to buy Asean banks |
| Business & Market 2009 | |||
| Written by Joyce Goh & Yong Yen Nie | |||
| Wednesday, 19 August 2009 11:29 | |||
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Its group managing director Yvonne Chia said Hong Leong was on the lookout for suitable banks to acquire, given that the bank had high capital. As of June 30, 2009, the banking group had a risk-weighted capital ratio of 16%. “It’s always an important part of the next Asian growth. A lot of people come and see us because they know we have the capital,” she told reporters after announcing Hong Leong Bank’s results for the financial year ended June 30, 2009 (FY09) yesterday. Chia said the bank would look more into acquiring stakes in overseas banks, rather than obtaining operating licences. However, she said Hong Leong Bank was currently not in talks with any bank. “We may not have Indonesia and Thailand... but those, you can buy into banks. But to go into Vietnam as a full-fledged 100% subsidiary, we are the first Southeast Asian bank there, and also the first to go into Chengdu,” she said. Hong Leong Bank group financial controller Premod Paul Thomas said Hong Leong wanted to be cautious when it came to  acquiring stakes in banks, as many banks had paid very high multiples for stakes in overseas financial institutions.Chia said at the end of the day, the banking group had to evaluate the business it was buying into based on strategic fit and earnings accretion. “First we must believe there is potential in that country. Then choose the right vehicle to merge. It’s a business case. Even if we like the country but not the candidate, there’s no point. Sometimes you get the candidate but the wrong country,” she said. Chia added that Hong Leong planned to have six to 10 bank branches in Vietnam in the future. The banking group would open its first full-fledged commercial bank branch in Ho Chi Minh City this October, while its second branch would be in Hanoi. Hong Leong Bank’s fourth quarter net profit rose 48.8% to RM199.37 million from RM133.9 million a year earlier, underpinned by its non-interest income that rose 19% to RM570 million due to expansion in its foreign exchange operations. Revenue rose 1.5% to RM493.6 million from RM486.38 million a year earlier. Earnings per share stood at 13.76 sen versus 9.24 sen. The bank had proposed a final dividend of 15 sen less tax for the quarter under review. For the full year, Hong Leong Bank’s net profit rose 22% to RM905.33 million from RM741.82 million for FY08. Revenue was 4% higher at RM2.09 billion, compared with RM2.02 billion a year earlier. Net non-performing loan ratio improved to 1.3% from 1.4%. Going forward, Chia said the bank remained cautiously optimistic although financial and credit markets had stabilised. “We see contrasting patterns that have yet to come together into a consistent pattern to say we are on solid recovery. Today, it’s about the real economy that has gone through the de-leveraging process and how much of its substance is going to be sustained... and going to its previous capacity. “I don’t think we are in a recovery yet... Those signs are signs of reversing the trajectory,” she said. Meanwhile, Hong Leong Financial Group Bhd’s (HLFG) net profit for the fourth quarter ended June 30, 2009 (4Q09) rose 32.5% to RM191.42 million from RM144.45 million, mainly due to contributions from its commercial banking operations, which was off-set by lower contributions from insurance and investment banking. Revenue was up 2.5% to RM574.75 million compared with RM560.93 million a year earlier. Earnings per share stood at 18.5 sen versus 13.9 sen. Investment banking had recorded a pre-tax loss of RM46.6 million compared to a profit before tax of RM6.9 million a year earlier, mainly due to an impairment of goodwill of RM57.2 million. The insurance division registered a 7.7% drop in its profit before tax to RM66 million from RM71.5 million, mainly sue to lower net insurance premium. For the full year, HLFG’s net profit rose 15.2% to RM632.02 million from RM548.68 million a year earlier. Revenue was up 2% to RM2.27 billion compared with RM2.22 billion a year. HLG Capital Bhd’s (HLG Cap) 4Q09 net profit rose 18.1% to RM10.43 million from RM8.83 million, underpinned by 77.3% rise in revenue to RM24.5 million from RM13.82 million a year earlier. Earnings per share stood at 8.72 sen against 7.27 sen. For the full year, its net profit fell 54% to RM12.47 million from RM27.12 million, while revenue fell 16.7% to RM60.13 million from RM72.17 million a year earlier. This article appeared in The Edge Financial Daily, August 19, 2009.
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