h1fy18 results a presentation - hong leong bank · fy16 fy17 h1fy18 14 6 13 0.25% 0.09% 0.20% fy16...

1

H1FY18 RESULTS ANALYST PRESENTATION

26 February 2018

Agenda

Financial Highlights: H1FY18

1

HLB H1FY18 ended 31 December 2017

150.6 155.3

H1FY17 H1FY18

RM'bil

123.4 125.5

H1FY17 H1FY18

RM'bil

0.86% 0.97%

107%96%

167%151%

H1FY17 H1FY18

1,2841,384

H1FY17 H1FY18

RM'mil

991 1,023

43.6%42.5%

H1FY17 H1FY18

RM'mil2,275

2,407

H1FY17 H1FY18

RM'mil

Total Income Opex & CIR

GIL & Coverage Ratio Gross Loans

Operating Profit

Deposits

3

2% 3%

Key financial highlights Strong underlying performance led by healthy top-line, improved efficiencies & stable asset quality

•

6%

•

8%

•

• • •


Gross Loan Growth

LD Ratio

Net Interest Margin

Non- Interest Income

Ratio

Cost-to-income Ratio

Gross Impaired

Loan Ratio

Return on Equity

3-4%

(revised)

~82%

>2.1%

~26%

<44%

<1%

10% - 11%

Target FY18

1.8% y-o-y

80.8%

2.13%

26%

42.5%

0.97%

11.5%

Achieved H1FY18

P

P

P

Management guidance Most KPIs met with a solid first half performance

4

P

P

P


Achieved 5-Year

record high PAT

RM’mil H1FY17 H1FY18 YoY %

Total Income 2,275 2,407 +6%

Operating expenses (991) (1,023) +3%

Operating profit before allowances 1,284 1,384 +8%

Loan allowances & other impairments (53) (53) -

Share of profits from associates & JV 141 283 +101%

Profit before tax 1,371 1,613 +18%

Profit after tax 1,093 1,322 +21%

5

Profit & Loss Net profit improved on strong revenue momentum, solid cost control and recovery from BOCD

•

•

•

RM'mil

Profit after Tax


833 856 864 886 896

2.08%2.14% 2.14% 2.13% 2.13%

Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18

RM'mil

Net Interest Income NIM

1,635

1,782

2.05%2.13%

H1FY17 H1FY18

6

Net Interest Income & NIM Continued improvements in net interest income; NIM stable


313 291

252 265

33 33

42 37

28.1%

26.0%

H1FY17 H1FY18

Fee Income Trading & Investment

Forex Islamic and others

Non Interest Income ratio

Non Interest Income Continued growth in wealth management income; NII ratio within guidance at 26%

7

Fee income:

of which

640 625 RM’mil

H1FY17

RM49 mil 21%

Wealth Management Income

H1FY18

RM59 mil

Credit Card Fees

H1FY18

RM115 mil H1FY17

RM123 mil 7%


Personnel cost

55%

Establishment

24%

Marketing8%

Admin & general

12%

558 558

236 259

77 82 120 123

43.6%42.5%

H1FY17 H1FY18

Personnel cost Establishment

Marketing Admin & general

CIR

Operating Expense 6 consecutive quarters of positive JAWS; CIR improved further to 42.5%

8

Establishment

25%

Composition of Operating Expenses

H1FY18

RM’mil

991 1,023


19,226 20,377 20,767

7.0% 7.0% 6.9%

FY16 FY17 H1FY18

3,755 3,998 3,911

1,850 1,812 1,752

7.5% 7.5%7.0%

FY16 FY17 H1FY18Credit Card Personal LoanMarket Share %

18,446 17,584 17,311

10.1%9.4% 9.1%

FY16 FY17 H1FY18

51,510 56,861 59,118

11.2% 11.3% 11.3%

FY16 FY17 H1FY18

104,169

113,418

120,605 125,147 125,549

8.0% 7.9% 7.9% 7.7% 7.6%

FY14 FY15 FY16 FY17 H1FY18

RM'mil

Loans Growth led by mortgages, SME and overseas

1.8%

y-o-y

9

Note: * Loan figures are based on group, but market share data is based on domestic only.


129%

136%

120%

96% 96%

101%

89%85% 84% 84%

177%181%

151% 151%


LIC Industry LIC LIC (incld reg reserve)

Asset Quality GIL ratio stable q-o-q; Impaired loans coverage above 150% with pledged securities

Gross Impaired Loans Loan Impairment Coverage (LIC)

10

Provisions

made on

GIL

Securities

pledged

Note: Industry ratio has been restated by regulators

1,232

948 957

1,203 1,216

1.18%

0.84% 0.79%

0.96% 0.97%

1.77%

1.61% 1.63% 1.63%1.52%


RM'mil

Gross impaired loans GIL Ratio Industry GIL ratio


233

307 324

0.45%

0.54% 0.55%

FY16 FY17 H1FY18

14

6 13

0.25%

0.09%

0.20%

FY16 FY17 H1FY18

Asset Quality A very stable quarter; no significant stresses on our credit portfolio

11

943 1,197 1,203

0.82%

1.01% 1.01%

FY16 FY17 H1FY18

145 143 148

0.79% 0.81% 0.85%

FY16 FY17 H1FY18

273 303 306

1.42% 1.49% 1.47%

FY16 FY17 H1FY18


62,697 63,340 63,187

7.3%6.9%

6.6%

FY16 FY17 H1FY18

81,353 86,176 84,282

12.3% 12.5%12.0%

FY16 FY17 H1FY18

84,719 87,976 89,473

9.0% 9.0% 8.8%

FY16 FY17 H1FY18

37,185 38,764 41,309

7.5% 7.3% 7.4%

FY16 FY17 H1FY18130,252

140,276

148,524 155,233 155,332

8.2% 8.2%8.6% 8.7%

8.4%


RM'mil

Deposit Led by strong up-lift from CASA deposits

12

3.1%

y-o-y

Note: * Deposit figures are based on group, but market share data is based on domestic

only; Business enterprise deposits including FI


13.4%12.7%

13.3%12.9% 13.1%

15.3% 15.1%15.8%

15.3%15.8%

13.8%13.1%

13.7%13.3%

13.8%


CET1 Tier 1 Total capital ratio

Liquidity & Capital Robust liquidity and capital positions

Loan Deposit Ratio Capital Adequacy^

Note: * Industry data derived from banking system’s commercial banks plus

Islamic banks only

Note: ^ capital base & ratio after proposed dividends

13

Liquidity Coverage Ratio (LCR)

H1FY18

Minimum requirement in

Year 2017

Minimum requirement by

Year 2019

LCR 118% 80% 100%

82.3% 84.0% 89.3% 91.3% 91.4%

80.0% 80.9% 81.2% 80.6% 80.8%

FY14 FY15 FY16 FY17 Q2FY18

Industry LDR HLB LDR


10.7 10.8 11.1

11.4 11.3

27 28

29

31

33


NAV/share EPS

11.1%11.7%

10.2%

11.5%

1.30%1.37%

1.15%

1.33%

Q1FY18 Q2FY18 H1FY17 H1FY18

ROE ROA

Shareholder Value Stronger returns from solid underlying performance; declared higher interim dividend of 16 sen per share

Return On Equity & Return on Assets Net Assets & Earnings Per Share

14

Agenda

Business Update

2


Connect users earn cash every time they send an e-Ang Pow PLUS RM100,000 was up for grabs!

Digital Banking – Retail

16

+27%

Active Users

+71%

Mobile Users

+36%

Transactional Users

+70%

Transactional Volume

HIGHLIGHTS FOR H1FY18

CNY 2018: • 8X growth in total e-

angpow transactions

• 45,000 e-angpows

Introduced e-Ang Pow on Hong Leong Connect


WeChat Pay Marks the start of business collaborations between HLB and Chinese technology giant, Tencent

17

980 Million Active users worldwide

2018

4 million Chinese tourists

20

2017

2017

• Allow Chinese tourists to continue using their WeChat accounts to make purchases when visiting Malaysia in RMB as well as other major currencies

• Easy and quick setup to onboard new merchants • Simple user interface and payment procedures

for customers’ best experience

Easy to Adopt & User Friendly

Convenience

Opportunity for HLB • Leveraging on merchants with the

potential to improve on fee & FX income generation

• WeChat local e-Wallet targeted to come to Malaysia in 2018

Million Active users in Malaysia

Latest The first FI to sign-up WeChat Cross Border Master Merchant Acquiring Service Signed up first major merchant in Malaysia; Went live on 13 Feb 2018

Creative Marketing • 100% Digital transaction, e-receipts, payment

confirmation • 1st of the kind payment platform in Malaysia • Hotel & F&B reservations, transport, ticketing,

investment – all done within one app


cv

cv

Digital Banking – Wholesale

18

+22%

Users

+20%

Transactional Volume

+82%

Transactional Users

+31%

Transactional Amount

HIGHLIGHTS FOR H1FY18

Best Bank in Malaysia for Asiamoney Cash Management Customer Satisfaction Award in Asiamoney magazine’s survey in 2017

>200 customers have signed up since its launch in November 2017

Encouraging response Achievement


■Digital Transformation Milestones

19

67.3m(37%)

96.0m(43%)

138.6m(46%)

89.5m(45%)

8.3m(5%)

21.7m(10%)

49.1m(16%)

54.1m(27%)

30.6m(17%)

29.5m

(13%)

28.4m(9%)

12.7m

(6%)

75.5m(42%)

78.7m(35%)

84.4m

(28%)

42.2m(21%)

FY15 FY16 FY17 H1 FY18

Internet Mobile Branch SST

COST SAVINGS

RM

30 million

H1FY18

SHIFT: TRADITIONAL >>> DIGITAL

72%

- 3%

Resulting in a 3% reduction of total cost base

42%

HLB H1FY18 ended 31 December 2017 20

Continued to maintain good traction in top-line growth with strong focus on NIM management and franchise led income.

Expenses are tightly managed, delivered positive JAWS for the 6th consecutive quarter.

Credit quality: Stable in the second quarter, with no particular credit stresses in any segment. GIL are well secured with collateral.

BOCD: continued to show good momentum with steady recovery; listed on Shanghai Stock Exchange on 31 Jan 2018.

Liquidity and capital positions remain strong and supportive of further growth.

Summary Strong set of numbers for first half FY2018

Appendix

Supplementary Information

3

HLB H1FY18 ended 31 December 2017 22

Group Performance

RM’mil H1FY17 H1FY18 Change

% (YoY) Q2FY18

Change

% (YoY)

Change

% (QoQ)

Net interest income^ 1,635 1,782 +9.0% 896 +7.6% +1.2%

Non interest income^ 640 625 -2.4% 332 -3.8% +13.4%

Total income 2,275 2,407 +5.8% 1,229 +4.2% +4.2%

Operating expenses* (991) (1,023) +3.2% (516) +3.0% +1.7%

Operating profit before allowances* 1,284 1,384 +7.8% 713 +5.1% +6.1%

Allowances for loans and other

impairments (53) (53) +0.3% (10) -62.9% -77.1%

Share of profits from associate & JV 141 283 +>100% 130 +>100% -14.5%

Profit before tax 1,371 1,613 +17.7% 833 +19.6% +6.8%

Profit after tax 1,093 1,322 +21.0% 683 +24.2% +6.9%


14.2%16.0%

H1FY17 H1FY18

22.524.5

H1FY17 H1FY18

RM'bil

19.621.3

H1FY17 H1FY18

RM'bil

115134

H1FY17 H1FY18

RM'mil268

317

H1FY17 H1FY18

RM'mil

99 101

37.1%

31.8%

H1FY17 H1FY18

Total Net Income Opex & CIR

Gross Financing Deposits

Profit after Tax & Zakat

Capital Adequacy

23

9%

HLISB - Key financial highlights

•

18%

•

16%

•

• • •

9%

YOU THANK

For further information, please visit www.hlb.com.my or contact:

Investor Relations:

Jason Teh

Head, Corporate Finance & Investor Relations

DID: +60320812972

Email: [email protected]

This presentation has been prepared by Hong Leong Bank (“HLB”) for selected recipients for information purposes only. The information contained herein is believed to be correct as

of the date of this presentation and is given in summary form and does not purport to be complete. HLB does not make any representation or warranty, whether expressed or implied,

as to the adequacy, accuracy or completeness of any such information, opinion or estimate contained and shall not be responsible or liable for any consequences of any reliance

thereon by any recipient. Opinions and estimates constitute the judgment of HLB as of the date of this presentation and are subject to change without notice.

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construed as an offer or recommendation to buy or sell securities. This presentation does not purport to contain all the information that a prospective investor may require and the

information contained herein does not take into account the investment objectives, financial situation or needs of every recipient hence it may not be appropriate for all persons. Each

recipient is responsible to make his or her own independent assessment of the information provided herein and should not treat the information provided as advice relating to

investment or related matters. Each recipient should consult his or her own advisers and must make his or her own independent decision regarding any investment.

Certain statements contained in this presentation may be statements of future expectations and involve known and unknown risks and uncertainties. Forward-looking statements

contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. HLB does not have

any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Each recipient should not place undue reliance

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