Hong Leong Bank profits dip 0.6% to $154.75m in Q1

Net interest income declined 5.7%.

Hong Leong Bank opened the year on shaky financial footing after earnings dipped 0.6% YoY and 1.3% QoQ to $154.75m (RM639.5m) in Q1FY19, according to UOB Kay Hian.

Also read: Hong Leong Bank unveils AI-powered chatbot

Net interest income fell 5.7% on the back of a compression in net interest margin (NIMs) which declined by a further 5 basis points QoQ and a fee income contraction of 1.7%.

“Revenue was flattish qoq but declined 1.5% yoy in 1QFY19. As such, the group was not able to generate a positive operating JAW resulting in 120bp qoq and 160bp yoy deterioration in cost to income ratio to 44.6% in 1QFY19,” analyst Keith Wee Teck Keong said in a report.

Loan growth of 4% in Q1 also remained below industry average with working capital loans and automobile loans booking flattish performances and non-residential property loans contracting 1.2%.

However, the bank’s gross impaired loan (GIL) ratio improved from 0.87% in Q4 to 0.80% in Q1FY19.