annual report 2012

Transcription

annual report 2012

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annual report 2012
abridged version
Hong Leong Bank Berhad (97141-X)
Level 8, Wisma Hong Leong
18 Jalan Perak, 50450 Kuala Lumpur
Tel : 03-2164 8228 Fax : 03-2164 2503
www.hlb.com.my
(97141-X)
1
A n n ua l R e p ort 2 012 ~ Ho n g Le o n g BAN K B erha d
Our Vision
An outstanding financial services
organisation, highly competitive
and profitable, where people make
the difference
2
Ho n g Leong BA NK B erhad ~ A nnua l R e p o rt 2 012
3
With a heritage of more than 100 years, Hong Leong Bank
Berhad is a major financial services company in the region.
Apart from its core domestic market, the Bank has
presence in Singapore, Hong Kong, Vietnam and China.
4
CHAIRMAN’S
STATEMENT
Dear Shareholders and Stakeholders,
The past year was a significant year for Hong Leong Bank
Group (“Group”). The transformation of the Banking Group
in pursuit of Prime Value Creation continues.
5
CHAIRMAN’S
STATEMENT
(continued)
“
The merger of Hong Leong Bank Group with EON Bank Group
has enhanced our franchise value as a leading domestic bank in
Malaysia. This has been largely accomplished through increased
synergies from the enlarged franchise, growth and embedment of
our position as a relevant, dynamic and competitive Asian bank to
meet the rapidly evolving needs of our customers.
The merger of Hong Leong
Bank Group with EON Bank
Group has enhanced our
franchise value as a leading
domestic bank in Malaysia. This
has been largely accomplished
through increased synergies
from the enlarged franchise,
growth and embedment of our
position as a relevant, dynamic
and competitive Asian bank to
meet the rapidly evolving needs
of our customers.
It gives me great pleasure to
present the Annual Report
and Financial Statements
of the Hong Leong Bank
Group (“Group”) and Hong
Leong Bank (“HLB” or Bank”)
for the financial year ended
30 June 2012.
Operating Environment
The
global
economic
environment in the past financial
year was challenging. Financial
and political uncertainties arising
from the Eurozone debt debacle
and downgrade of the US’
AAA sovereign rating which
shocked the financial markets
had weighed down economic
recovery efforts and dampened
investors’ confidence globally.
As a result, markets were volatile
and Central Banks worldwide
had to step in with further
quantitative easing and interest
rates correspondingly dropped
to historically low levels.
In Malaysia, amidst the tough
economic climate, the nation’s
economy managed to record
a steady pace of GDP growth
of 5.1% in the year 2011,
underpinned by strong domestic
demand and consumption
on the back of public sector
investments.
Notwithstanding the external
uncertainties
that
had
increased downside risks to
growth, we remain optimistic
for a continued moderate
expansion in the Malaysian
economy
through
2012.
Sustained private consumption
and acceleration in investment
activities will be key in the six
months ahead where multiplier
effects from construction and
infrastructure-related projects
as part of the Economic
Transformation
Programme
(ETP) can spill over to
benefit other investment and
consumption activities; giving
some buffer against the effects
of further external economic
downturn.
However,
economy,
being an open
Malaysia
is
”
not insulated from global
developments and Malaysian
financial
institutions
are
continually challenged to grow
and to increase competitiveness
and resilience to withstand the
impact of external economic
instability.
Growth and profitability with
no compromise in governance
and risk management remains
key towards future-proofing the
sustainability of the Bank.
Gaining Traction in
Integration
Despite the weak and volatile
global economic environment in
the past financial year, the Bank
had stayed on course and made
significant progress, especially
in its integration programmes
following the successful merger
with EON Bank Group at the
end of the previous financial
year. In addition, the merger
between the Bank’s wholly
owned subsidiary, Hong Leong
Islamic Bank Berhad (“HLISB”),
with the former EONCAP Islamic
Bank Berhad in November 2011
represents the first successfully
completed Islamic bank merger
exercise in Malaysia. In this first
year we continued to work on
our integration plans to ensure
6
CHAIRMAN’S
STATEMENT
(continued)
that we are able to leverage on
the strengths of a now larger
and stronger entity.
A year from the S&P agreement
on 6 May 2011, we have
successfully consolidated the
two banking systems into one
single banking platform. This
will allow us to streamline our
processes, maintenance and
development costs, hardware
and software as well as
improve the time to market
for developing our products
and services; hence benefiting
the resources needed for our
operations.
While the merger activities
are on track and the synergies
achieved above planned target,
we are aware that there is
still much to do. To create
sustainable value for all our
stakeholders, we continue to
focus on improving efficiency
across the board to drive
synergies, customer fulfilment
and business momentum,
maximise return on assets,
execute branch rationalisation
programmes, as well as
strengthen integrated risk and
capital management.
With key milestones in our
integration activities achieved,
we realised a number of positive
values from the merger and also
showed improved performance
compared with the last year,
reflecting the consolidated
strength of the new entity.
Harnessing synergies for
capacity and capability
expansion
The merger had significantly
strengthened
the
Bank’s
domestic market position
as a major player in the
country’s banking industry.
It effectively transformed us
into a banking group of more
than RM145 billion in assets
and enables us to offer our
customers a stronger, broader
range of products, services
and solutions through a more
extensive network of over
300 branches and 1,500 selfservice terminals. By leveraging
the strengths of both banks,
we are now better positioned
to grow in the fast changing,
liberalising and competitive
banking market.
For FY2012, we saw a steady
increase in both assets and
deposits, with assets growing
from RM145 billion as at 30
June 2011 to RM158 billion
as at 30 June 2012. Total
deposits grew from RM115
billion as at 30 June 2011 to
RM123 billion as at 30 June
2012. Deposit market share
is enhanced to 9.0%, against
6.0% before merger.
Our loan book increased from
RM84 billion as at 30 June
2011 to RM91 billion as at 30
June 2012. Loan market share
grew to 8.3%.
Strengthening
Shareholder Value
Overall, in FY2012, the Group
posted a strong financial
performance backed by the
results of the merger with EON
banking group. After-tax profit
climbed 44.9% year-on-year
to a record RM1,648 million,
up from RM1,137 million
(restated) last year. The key is
that, bar about RM175 million
of one-off integration costs, the
Bank has now a much higher
level and sustainable recurring
profits. The Group remains
highly disciplined and focused
on its long term vision and
competitiveness.
The intrinsic value of the Group
strengthened with earnings per
share (“EPS”) registering a 27%
year-on-year expansion to 99.2
sen. EPS growth had grown at
a compounded annual growth
rate of a solid 18% in the last
5 years.
Net assets per share (NA/share)
rose 26.8% to RM6.52, against
RM5.14 last financial year. NA/
share had multiplied 2.21 times
from RM2.95 in the financial
year ended 30 June 2006.
Return on average shareholder
funds was resilient at 17.5%
for FY2012.
At the close of the financial
year ended 30 June 2012,
the Group’s share price was
RM12.44 per share, up 19.6%
against RM10.40 on 5 May
2011 pre-merger day, and had
outperformed the Kuala Lumpur
Composite Index. On balance,
all the key value creation
indicators are on track.
The Board had proposed a final
dividend of 27 sen per share
less tax of 25%, payable on 20
November 2012, subject to the
approval by shareholders in the
coming Annual General Meeting
on 25 October 2012. Subject
to the approval, total dividends
in respect of the financial year
ended 30 June 2012 would be
38 sen per share; up 14 sen
from prior year; a reflection of
a much stronger and profitable
franchise.
7
CHAIRMAN’S
STATEMENT
(continued)
Upholding Asset Quality
The Group continues to maintain
a strong focus on asset quality in
the enlarged banking franchise,
adopting the best policies that
have characterised HLB in
credit underwriting standards
and practices. The Bank had
also taken proactive steps in
the enlarged credit portfolio
in monitoring special care
loan accounts and recoveries
management.
Within a year after merger,
our
loan
loss
coverage
strengthened further to 158.2%
while our gross impaired loan
ratio improved to 1.69%;
outperforming the banking
system averages and being
amongst the industry’s best and
top 2 ratio respectively. The
Bank will continue to uphold
our philosophy of having strong
credit disciplines in running our
banking franchise.
Growing in Malaysia
As one of the key players in the
Malaysian financial industry,
we are committed to further
developing our franchise to be
strategically compelling for all
our stakeholders whilst playing
our role in propelling the financial
aspirations of the country. To
do so, we recognise the need
to stay connected and relevant
to our customers across the
different segments.
Deepening our Islamic
Banking Footprints
Our Islamic bank, HLISB,
has
gained
a
stronger
foothold in the local Islamic
banking
market,
making
further inroads in serving
a wide range of customers
and market segments. The
recently completed merger has
increased our capabilities in new
segments. At the same time,
we are continuously enhancing
our operational capabilities for
greater scale and growth. We
applaud the strong leadership
of Bank Negara Malaysia and
the Governor for strengthening
Islamic finance on a wholesome
basis and promoting it to the
world, providing a totally
new capability for Malaysia
in particular. Today, HLISB
contributes approximately 13%
of the Group’s total deposits
and financing. HLISB remains
committed in driving growth,
premised on our strong respect
and governance of Shariah
principles and practices under
the guidance of our highly
respected Shariah Council.
HLISB continues to expand its
exposure in the Islamic banking
industry by strengthening its
foothold in local markets, while
at the same time exploring
the potential for even greater
growth
through
regional
exposure.
Growing in the Region
The global middle class is
expected to increase to 3.2
billion people by 2020 from 1.8
billion in 2009. Asia is expected
to contribute 85% of this
increase to become the home
to more than 50% of the global
middle class. Within Asia, the
600 million population in the
ASEAN region itself presents a
large and fast-expanding market
that will form the backbone of
the region’s growth.
8
CHAIRMAN’S
STATEMENT
(continued)
In line with this expectation, the
Bank will continue to grow its
regional business in China, Hong
Kong, Singapore and Vietnam
while seeking opportunities to
participate in new markets and
segments in the ASEAN region.
Building Regional
Platforms
The group remains committed
to our regionalisation agenda,
where during the year we
have deepened our presence
and improved our cross border
capabilities in our existing
markets. We also remain
optimistic on new opportunities
in the region.
Profit contribution from the
Bank’s 20% interest in Bank
of Chengdu Co., Ltd. (“Bank of
Chengdu”) in the financial year
ended 30 June 2012 was RM217
million, up 2.8% from last year.
Excluding one-offs from the
Bank of Chengdu’s results last
year, the growth would be
approximately 13% year-onyear. Total profit from overseas
operations and investments
contributes 13.4% of Group pretax profit, up 17.5% to RM283
million from last year.
Post the 2008 global financial
crisis, there has been challenges
for
Vietnam
economy
in
transition. The banking industry
now is clearly at a cross roads
and in need of restructuring.
A stronger and more vibrant
banking sector will emerge with
a new macroeconomic and
bank restructuring framework
initiated by the State Bank of
Vietnam (SBV). In spite of the
number of banks, we believe this
market is underserved in terms
of reach to the mass population
as well as access to products
and services. However, Hong
Leong Bank Vietnam since
inception in 2010 has turned
profitable and we will work
on scaling the franchise with
improving economic conditions.
Globally,
we
believe
the
economic
conditions
will
remain challenging, in view
of continued uncertainties in
the recovery of some of the
world’s largest economies. As
I am writing this, the global
economic
outlook
remains
murky. Real economic activities
are slowing sharply in some
countries, raising concerns
that they may fall into another
recession with central banks
in the Asian region engaging
macro prudential measures to
counter cyclical downturns.
Amidst the global headwinds
reverberating across the region,
we remain cautiously optimistic
on Asia’s regional and the
Malaysian economic growth,
which will be led mainly by
domestic demand, particularly
private
consumption
and
investment expenditures under
the Malaysian government’s
Economic
Transformation
Programme.
We will therefore continue to
drive our growth strategies
both
domestically
and
regionally, focusing on building
long-term relationships and
creating sustainable values for
our customers, shareholders,
employees and the community
as a whole. With the support of
our strong management team,
committed workforce and loyal
customers, I am confident that
Hong Leong Bank will continue
to embed the heritage of
Hong Leong Bank within our
communities to serve them
better.
I would like to thank the
Board
of
Directors,
our
customers, business partners
and shareholder for their
continuous
support,
trust
and confidence. My special
appreciation goes to the
entire team at the Bank for
their passion, commitment,
dedication and professionalism,
without which, all of this would
not be possible.
My sincere thanks also go to
Bank Negara Malaysia, the
Ministry of Finance, Government
agencies
and
regulatory
authorities for their invaluable
assistance, continuous guidance
and support.
Quek Leng Chan
Chairman
20 September 2012
9
FINANCIAL
HIGHLIGHTS
Group
June 08
RM Million
June 09
RM Million
June 10
RM Million
June 11
RM Million
June 12
RM Million
77,461
34,534
62,548
1,010
79,380
34,795
67,583
1,107
84,753
37,749
69,713
1,213
145,499
81,455
114,857
1,415
157,787
88,193
123,096
2,109
June 08
RM Million
June 09
RM Million
June 10
RM Million
June 11
RM Million
June 12
RM Million
69,993
30,306
56,467
949
70,708
30,938
59,719
861
77,778
33,589
63,239
989
87,650
38,549
65,924
1,079
140,285
75,997
108,940
1,674
Total Assets
Net Loans
Customer Deposits
Pre-tax Profit
Bank
Total Assets
Net Loans
Customer Deposits
Pre-tax Profit
Resilient Profitability
PAT up 45% y-o-y
Intrinsic Value of Bank Strengthens
EPS up 27% to 99.2 sen, NA per share up 27% to RM6.52
RM mil
2,500
PBT
RM
8.00
PAT
2,109
2,000
1,648
1,415
1,500
1,000
1,107
1,010
1,213
886
4.00
6.52
78.3
62.5
Sen
100.0
99.2
EPS
7.00
6.00
5.00
1,137
1,009
NA/SHARE
80.0
69.5
5.14
60.0
4.49
51.2
3.96
3.51
40.0
3.00
742
2.00
500
20.0
1.00
0
FY08
FY09
FY10
FY11
FY12
FY09
FY10
FY11
(net of proposed dividends)
20%
Core Capital Ratio
17.5%
18.0%
16.7%
16.5%
15.9%
15%
16.3%
RWCR
15.5%
15.3% 15.8% 15.3%15.3%
14.1%
12.8%
11.3%
15.3%
10%
14.0%
12.0%
10.0%
FY12
Core Capital Ratio & RWCR
ROSF
16.0%
FY08
Core Capital Ratio and RWCR remain healthy
Shareholder Value Creation Intact
ROSF above 17%
ROSF
20.0%
0.00
8.3%
5%
FY08
FY09
FY10
FY11
FY12
0%
FY08
FY09
FY10
FY11
PAT – Profit After Tax | PBT – Profit Before Tax | EPS – Earnings Per Share | NA – Net Assets
ROSF – Return On Shareholder Funds | RWCR – Risk Weighted Capital Ratio | Y-O-Y – Year-On-Year
FY12
0.0
10
GROUP MANAGING DIRECTOR/
CHIEF EXECUTIVE’S REVIEW
Dear Shareholders, Customers and Business Partners,
The financial year ending 30 June 2012 had been a challenging
but most exciting year.
“
Today, as a testimony
of our strategic focus and
resilience, HLB delivered
solid financial results while
maintaining strength in
capital position and an
enhanced franchise value
with enlarged business
operations and reach to the
communities.
”
From the political upheaval in the
Arab Springs to the economical
volatility arising from the
Eurozone crisis and the tragic
natural disasters that hit Japan
and other parts of the world –
the global landscape was not the
most encouraging. While Malaysia
and other Asian economies fared
much better than their Western
counterparts, supported by
strong domestic consumption
and rapid growth of regional trade
and investments, we were not
completely insulated from global
developments. The increased
regulatory burden placed on
financial institutions presented
further challenges in an intensely
competitive business environment.
It was against this backdrop that
we at Hong Leong Bank Berhad
(“HLB”) entered the year in the
thick of our integration of the EON
Bank Group (“EON”), following
the successful merger of the two
banks in the year before.
However, I am proud to say that
despite the challenging times,
we successfully delivered all key
milestones of our integration
programme. As a result, not only
were our integration plans on
track, we were able to achieve
early synergies from both banks
above our initial targets. Today,
as a testimony of our strategic
focus and resilience, HLB
delivered solid financial results
while maintaining strength in
capital position and an enhanced
franchise value with enlarged
business operations and reach to
the communities.
11
(continued)
Our successful merger at the end
of last year had effectively enabled
us to offer our wider base of
customers a more comprehensive
and broader range of products,
services and solutions through an
extensive network of over 300
branches and 1,500 self-service
terminals across the country.
The strengths from the liquidity
and deposit franchise, full-fledged
consumer banking business, multichannel distribution capability,
working capital offerings and
treasury solutions are now
complemented by a better
positioned auto loans portfolio and
penetration into the SME segment.
The enlarged entity also benefits
from a more balanced loan portfolio
for risk and earning diversification
purposes.
In terms of customer base,
EON’s larger mass retail and SME
customer base augmented HLB’s
reach to the Malaysian market,
which was prior to this, made up
of more affluent retail customers
and middle-market business
enterprises.
Throughout the integration, our
people had come together as ONE
2011
6 May 2011
Acquisition
complete
12 Aug
Customer Day 1
Seamless
experience for
customers.
Enlarged
footprint of >300
branches and
>1500 SSTs
Jul
1 Jul
Announcement
of the
vesting order
Aug
Aug
Publication of
100-days
merger
achievement
report
to serve the market and
provide an uninterrupted,
seamless
merger
experience for our
customers. Dedication
from the team to making
the integration exercise
as seamless as possible
for our customers and
community against an
aggressive timeline had
allowed us to exceed benchmarks
and achieve many milestones
in a short time span. Significant
investments in upfront planning
provided us with the foundation and
tools to facilitate change, stabilise
all businesses and operations
during the merger, maintain
business-as-usual momentum and
deliver a speedy and systematic
integration.
Having successfully integrated
our systems, processes and
policies into a single platform,
our customers can fully enjoy a
consistent experience with the
inter-operability of transactions at
branches and self-service terminals
as well as an integrated view of
their assets and products.
In a record time of under 60
days from the acquisition, we
successfully achieved the legal
vesting and went on to deliver a
1 Nov
Vesting Order to
merge EONCAP
Islamic Bank into
Hong Leong
Islamic Bank.
Malaysia’s first
vesting of an
Islamic Bank
Oct
common Customer Day 1 across
all customer touch points in less
than 100 days, on 12 August
2011. Finally, in just one year after
the merger, we completed the last
milestone of our integration journey
with the successful delivery of the
Single Platform Day 1 (“SPD1”),
which saw the complete migration
of all products and services with the
exception of the credit card system,
under both banking systems into
a single IT banking platform - a
marked achievement compared to
other mergers.
The
acquisition
itself
was
completed within a mere 6 days
from the acceptance of offer from
EON Capital Berhad. Thereafter,
we realigned our organisation
structure and by 10 June 2011,
had elected our senior management
team, consisting of senior bankers
from both organisations.
Nov
18 Oct
Successful
completion of
RM2.6 billion
Rights Issue
11 Nov
Capital
reduction from
Promino Sdn
Bhd (also
known as EBB)
Dec
Dec
Approval of
VSS application
as part of
merger
consolidation
exercise
6 May
SPD1 : Single
Platform Day 1
- Completion of
migration of
products &
Services to single
IT Platform
2012
Merger Growth
Mar
Mar
Lauch of
Community
Business
Banking
branch
22 June
Successful
issuance of Tier -2
Subordinated
Notes of RM1.5
billion
May
Jun
9 July
Launch of Mach
by Hong Leong
Bank sub-brand
Jul...
Moving forward - FY13
• Focus on innovating & enchancing efficiency,
scalability, and robustness of the system to deliver
best-in-class customer experience
• Actionable initiatives to caplure merger synergies
• Drive change management for transformative
growth and have customer in mind with
support from analytics and technology
Moving forward for FY2013...
12
(continued)
We are also happy to report that we achieved annualised synergies of RM200 million for the first year since
the merger.
With the completion of all these crucial merger milestones, we are now well positioned to accelerate the drive for
our growth agenda whilst working at further harnessing our merger synergies by improving efficiency across the
board, reasserting our core business and scaling new areas. We now have the platform to serve our customers
in a bigger and better way as we continue to give our best in delivering quality service, products and solutions
to our customers.
Strong Financial Performance
The value delivered by the combined bank is reflected in our financial performance for the year.
Net profit after tax for the merged Group surpassed the RM1.6 billion mark, closing at RM1.648 billion. The
following figures outline the performance summary of the Group for the financial year.
Highlights
Profitability
Pre-tax (RM’mil)
Net Profit (RM’mil)
EPS (RM’sen)
ROSF (%)
ROA (%)
Balance Sheet
Assets (RM’mil)
Gross Loan (RM’mil)
Deposits (RM’mil)
NA/Share (RM’)
Valuation as at 30 June 2012
Stock Price (RM)^
Market Capitalisation (RM’bil)
*
#
^
FY2012
Actual
FY2011
Proforma#
Change vs
FY2011
Proforma
FY2011
Actual*
Change vs.
FY2011
actual
2,109
1,648
99
17.5%
1.09%
1,943
1,533
75
14.8%
1.09%
+8.6%
+7.5%
+24 sen
+2.7%
at par
1,415
1,137
78
16.3%
0.99%
+49.0%
+44.9%
+21 sen
+1.2%
+10 bps
157,787
90,571
123,096
6.52
145,499
84,022
114,857
5.14
+8.4%
+7.8%
+7.2%
+26.8%
145,499
84,022
114,857
5.14
+8.4%
+7.8%
+7.2%
+26.8%
12.44
22.38
12.59
21.05
-1.2%
+6.3%
12.59
21.05
-1.2%
+6.3%
Consolidated with ex-EON Bank Group results from 6 May 2011
Combined as though ex-EON Bank Group being consolidated from beginning of financial year
Stock price for FY2011 adjusted for right issue
13
(continued)
Both loans and deposits showed moderate growth of 7.8% and 7.2% in FY2012, driven broadly by both the
retail and business sector, whilst enhancing our market positioning.
As at June 2012
Loans
RM’mil
Market
Share %
As at June 2011
RM’mil
Market
Share %
Growth
FY12 vs
FY11
By Economic Purpose:
Residental Mortgages
Non Residental Mortgages
Transport Vehicle Loans
Credit Cards
Personal Use
Working Capital
30,689
9,985
17,252
4,233
3,577
19,907
10.7%
8.2%
11.7%
13.1%
6.8%
7.5%
27,649
9,059
17,271
4,263
3,568
17,831
11.0%
9.1%
12.5%
13.8%
7.7%
7.3%
11.0%
10.2%
-0.1%
-0.7%
0.2%
11.6%
By Customer Type:
Loan to Individual
Loan to Domestic Enterprise
55,475
31,854
9.6%
8.0%
52,469
28,027
10.0%
7.8%
5.7%
13.7%
Total Gross Loans
90,571
8.3%
84,022
8.7%
7.8%
*
HLB analysis
Deposits
As at June 2012
Market
RM’mil
Share %
As at June 2011
Market
RM’mil
Share %
Growth
FY2012 vs
FY2011
By Type:
Fixed Deposits
Saving Accounts
Current Accounts
NIDs
74,739
14,816
14,676
5,829
12.0%
11.0%
6.8%
9.3%
68,490
12,515
14,944
5,584
12.0%
11.4%
7.0%
11.1%
9.1%
18.4%
-1.8%
4.4%
By Customer Type:
Individuals
Business Enterprises
Government and Statutory
59,427
57,509
3,862
12.1%
8.0%
4.8%
51,479
49,166
5,572
11.9%
7.6%
7.4%
15.4%
17.0%
-30.7%
123,096
9.0%
114,857
9.5%
7.2%
Total Deposits
14
(continued)
The performance for other key shareholder value indicators for the merged entity had been satisfactory. Earnings
per share rose by 21 sen to 99 sen, against 78 sen last year. Net assets per share improved by 27% to RM6.52
against RM5.14 last year. Return on assets improved to 1.1%. For the fourth consecutive year, return on
average shareholder funds was above 16% and stood at 17.5% for FY2012.
• FY2012 net profit at RM1.65 billion, up 7.5% from FY2011 proforma
Profit growth
remains strong
• Final quarter contributed RM395 million, up 17.1% from corresponding quarter FY2011
proforma
• FY2012 ROSF at 17.5% excluding integration costs ROSF at 18.8%
• NIMs withstanding competitive pressures on deposits & loans pricing
Strong Deposit
growth:
balanced loan
growth
Liquidity, Capital
& Operating
Efficiences on
plan
Integration on
track
• Deposits grew 7.2% to RM123.1 billion in FY2012 reflecting strong customes franchise
• Gross loans, advances & financing grew 7.8% y-o-y to RM90.6 billion in FY2012; with final
quarter Q4 FY2012 loans growth at 3.3% against Q3 FY2012
• Loan growth reflects strong business momentum offset by on going portfolio
rebalancing effort
• Strong liquidity franchise remained supportive of growth with loan to deposit ratio at 73.6%
• Cost-income ratio (excluding integration cost) at 44.9% in FY2012
• Hong Leong Bank Group remain well capitalized, reported Tier 1 and RWCR ratio at 11.7%
and 15.9% respectively, well above regulatory requirements
• SPD1 achieved, providing single IT platform to deliver enchanced customer experience
across bank
• Community Business Branches & Centres completed to further improve service
and convenience provided to business communities
• Realised full year synergies of RM200 million exceeded original target
15
(continued)
Summary highlights of the Group’s financial performance
Highlights
Income Statement
Total Income (RM’mil)
Operating Exp, excl. merger cost
(RM’mil)
Pre-tax Profit (RM’mil)
Net Profit (RM’mil)
Balance Sheet
Assets (RM’mil)
Gross Loan (RM’mil)
Deposits (RM’mil)
Shareholders’ Fund (RM’mil)
KPI
ROSF (%)
ROA (%)
Cost-Income Ratio (excl. merger cost)
Loan-to-Deposits Ratio
Gross Impaired Loan Ratio
Allowance Coverage
EPS (RM sen)
NA/Share (RM)
Core Capital Ratio
Risk-Weighted Capital (RWCR) ratio
*
#
FY2012
Actual
FY2011
Proforma#
Change vs
FY2011
Proforma
FY2011
Actual*
Change vs.
FY2011
actual
3,894
4,047
-3.8%
2,552
+52.6%
1,749
2,109
1,648
1,865
1,943
1,533
-6.2%
+8.6%
+7.5%
1,133
1,415
1,137
+54.4%
+49.0%
+44.9%
157,787
90,571
123,096
11,419
145,499
84,022
114,857
7,468
+8.4%
+7.8%
+7.2%
+52.9%
145,499
84,022
114,857
7,468
+8.4%
+7.8%
+7.2%
+52.9%
17.5%
1.09%
44.9%
73.6%
1.69%
158%
99
6.52
11.7%
15.9%
14.8%
1.09%
46.1%
73.3%
2.28%
135%
75
5.14
8.5%
14.3%
+2.7%
at par
-1.2%
+0.4%
-0.6%
+23.3%
+24 sen
+26.8%
+3.2%
+1.6%
16.3%
0.99%
44.4%
73.2%
2.28%
135%
78
5.14
8.5%
14.3%
+1.2%
+0.1%
+0.5%
+0.4%
-0.6%
+23.3%
+21 sen
+26.8%
+3.2%
+1.6%
Consolidated with Ex-EON Bank Group results from 6 May 2011, with 54 days result
Combined as though Ex-EON Bank Group being consolidated from beginning of financial year
Business Operational Overview
The segmental profit contribution for the financial year is outlined in the figure below.
Consolidated Profit Before Tax
FY2011
FY2012
BCB
20%
BCB
29%
PFS
47%
PFS
46%
RM1,415 mil
RM2,109 mil
GM
18%
Assoc. &
JV15%
Assoc.
&
JV10%
GM
15%
16
(continued)
Personal Financial Services
Revenue and pre-tax profit for
Personal Financial Services (“PFS”)
surged to RM2.5 billion and RM965
million for the financial year ended 30
June 2012 respectively, contributing
65% and 46% to the Group. PFS’s
success is attributed to its visionary
strategies,
strong
leadership
and execution of a bold change
management step to rebalance the
consumer banking portfolio of retail
products since the merger.
With a sizable retail customer base,
strength across retail products,
multi-channel and multi-touch point
distribution capability, PFS ended
the financial year with RM62 billion
of gross loans, accounting for 68%
of the Group’s total gross loans
and RM60 billion in retail deposits,
accounting for 49% of the Group’s
total deposits.
PFS Loans
• Mortgage sales continue to hold
momentum. As at 30 June 2012,
the mortgage loan portfolio stood
at RM38 billion and is the core
retail lending business activity
of the Group. It accounted for
42% of the Group’s total gross
loans and registered a yearon-year growth of 9.3%. HLB
remains the fourth largest bank
in consumer mortgages, with a
market share of 9%.
• Auto Loans, the second largest
component of the Group’s
consumer credit business, the
auto loans portfolio stood at
above RM17 billion at the end
of the financial year, accounting
for 19% of total gross loans.
HLB auto loans portfolio is
currently ranked number 4 in the
industry.
• As at 30 June 2012, receivables
from
the
Group’s
credit
cards were at RM4.2 billion,
contributing 5% of total gross
loans outstanding. Since the
merger, the credit card products
offered include Classic Card,
Gold Card, Platinum Card,
Platinum
Business
Card,
Signature, Essential, Fortune
and co-branded cards such as
ACCCIM, MTV, MATTA, GSC,
The Store & Pacific, MRCA
and INGIAFAM. With a total of
RM10.4 billion of total billings
for the financial year, HLB credit
cards loans outstanding today
represents about 13% of market
share.
PFS Deposits
The past year recorded more than
RM7 billion incremental deposits
for the full year and 445,000 new
current and savings accounts. This
record of continued year-on-year
growth of 14% was attributed to
the brand strength and realisation of
synergy through the enlarged entity
and driven by continuous product
offerings i.e. the first Hello Kitty
Debit Card.
The result is an affirmation of the
strong support of the community
towards HLB as a trusted bank.
HLB remains a leading player for
individual deposits, ranking fourth
in the industry with a market share
of 12%.
PFS Wealth Management
Services
The HLB Group commenced its retail
wealth management services in June
2002 and the business comprises
both investment and insurance
services. The expanded customer
base of mass affluent segment since
the merger presented an opportunity
to increase penetration of wealth
management services via the
Priority Banking sector. Assets under
management held at approximately
RM2.4 billion as at 30 June 2012
and in the past 12 months, efforts
were focused on Bancassurance
Regular premiums which grew a
healthy 67% year-on-year.
Business & Corporate
Banking
For the business sector, Business &
Corporate Banking (“BCB”) loans and
financing grew 13.1% to RM27.1
billion. Trade finance base increased
to RM9.5 billion with an enlarged
market share of 12.5%. Deposits
from business enterprises stood at
RM57.5 million with a market share
of 8% growth, mainly driven by
various marketing activities at the
branches.
During the year, BCB embarked
on a transformation programme to
deepen its footings as a communityentrenched bank among the local
business community and SMEs
through its network of over 80
Community
Business
Banking
branches and centres nationwide.
Further, the integration of Hong
Leong Private Banking with BCB
has provided our business owner
clients with a range of solutions to
effectively preserve and grow their
personal and business assets. Our
Relationship Managers and technical
specialists offer a depth of financial
and business experience to partner
and build a mutually beneficial longterm relationship across the SME
value chain.
The Bank intends to capitalise
on the Government Economic
Transformation Programme (ETP)
which provides market opportunities,
especially for SMEs, where an
estimated 60% of the initiatives are
expected to benefit SMEs across
all economic sectors. We continue
to maintain strong ties with trade
associations and business partners
such as the Malaysia SME Congress,
Malaysia
Hardware,
Machinery
& Building Materials Dealers’
Association (MHMBA), Building
Materials Distributor Association
of Malaysia (BMDAM), Metal
Dealers’ Association of Selangor &
Kuala Lumpur (MDA), Federation
Manufacturers Malaysia (FMM),
The Associated Chinese Chamber
of Commerce & Industry of Malaysia
(ACCIM) and The Chinese Chamber
of Commerce & Industry (KLFCCCI)
to promote business development in
the sector.
Post-merger,
our
Corporate
Structured Finance department
had been reorganised to leverage
on the expanded customer base
and diversified product offerings of
the group to provide total solutions
to our corporate clients, covering
Capital Markets and Advisory, Cash
Management and Global Markets.
Many
initiatives
are
being
continuously worked on to develop
talent, improve credit training
based on the principal belief that
17
(continued)
it really is people who make the
difference. Investment in the right
account officers and relationship
managers is a key priority for the
Bank to ensure the retention and
development of our employees
for sustainable growth. We also
reorganised
and
rationalised
the business, trade and credit
administration centres as well as
streamlined processes to improve
service turnaround. The Bank
adopts a prudent credit lending
approach where lending activities
are guided by robust credit policy as
well as sound credit management,
which are independent of the
sales function. Clearly, we believe
that quality at origination by the
relationship managers is key to our
embedment with the communities
we serve.
The strategic priorities moving
forward is to create more value for
customers for higher total returns on
each relationship well as to further
enhance the quality of our people,
service delivery on the ground and
credit culture embedment.
Global Markets
Global Markets turned in a strong
performance for FY2012 showing
commendable growth in its core
Balance Sheet and Customer
Franchise revenues across all
countries.
The business is beginning to benefit
from its focus growth areas –
fixed income, derivatives, financial
Institutions, foreign exchange flow
and franchise business. Investments
into talents were made in these
areas, resulting in exponential
growth in volumes and revenues.
Our increased fixed income
distribution capability has seen
Hong Leong Islamic Bank Berhad
participate as co-manager in KL
Kepong’s Ringgit Issuance and our
Singapore branch arranged a bond
with warrants transaction for Eu Yan
Sang, Singapore.
For Global Markets, our core foreign
exchange and liquidity management
franchise continues to perform
strongly. Foreign exchange revenue
increased 24% year-on-year despite
pressure on margins and provided
the Bank with good fee income.
Global Islamic Markets had made
notable progress this year as we
broadened our product base to
serve our clients better. From
predominantly a balance sheet
business, we have this year obtained
approvals for hedging products in
foreign exchange and interest rate
risk management.
It was a watershed year for the
business as we combined two
treasury rooms into one location
within two months of the merger
and, by SPD1, was fully functioning
on a single treasury platform. The
cutover was seamless for our
customers and counterparties and
Global Markets was thus able to
start leveraging on its skill sets. The
combined business is running on
approximately 30% less head count
and is investing in new growth areas
as well as growing revenues.
Amidst the growth ambition,
Global Markets is also cognisant of
the increased risk and regulatory
environment in which we operate.
This past year had seen continued
refinement in the Bank’s Market Risk
monitoring and the business staying
agile in the face of changing currency
and international risks.
Moving ahead, we are confident that
the model we have put in place this
year will provide positive revenue
leverage for the coming financial
year as we continue on our journey
to be a sustainable value generator
for our customers.
Islamic Banking
Hong Leong Islamic Bank Berhad
(“HLISB”) gained the distinction
of being the first Islamic Bank in
Malaysia to successfully undergo
a merger exercise with the
completion of its merger with
the former EONCAP Islamic Bank
Berhad on 1 November 2011.
Following this, HLISB continued
to be a wholly-owned Shariah
compliant subsidiary of Hong
Leong Bank Berhad and had
realised improved scale and size
to not only remain relevant, but
to enable it to leverage on a much
larger resource pool to compete
in
a
continuously
changing
environment. Indeed, it had set
the platform for a sustainable and
continued, profitable growth in the
Islamic Banking segment.
As an Islamic Financial Institution
at the forefront of the development
and provision of Islamic Banking
solutions, it is important that
the operations of HLISB remain
governed by our strong observance
of Shariah principles, compliance
of which falls under the purview of
Bank Negara Malaysia. Accordingly,
at an operational level, an internal
Shariah Committee, members of
which are widely experienced and
suitably qualified Shariah scholars,
oversees all Shariah related matters
within HLISB.
Post-merger, HLISB saw an increase
in its total assets by RM9.7 billion,
or 80%, to RM21.9 billion from
RM12.2 billion at the beginning
of the financial year. It also saw
improvement in its financial business
which increased RM6.7 billion, or
124%, to RM12.0 billion in the same
period and likewise for its treasury
assets that saw an increase of
RM3.8 billion, or 127%, bringing it to
RM6.8 billion. The deposits business
remained strong at RM16.3 billion as
reflected by an increase of RM7.1
billion, or 77%. While providing for
fast growing business volumes,
HLISB saw asset quality improving
significantly with the gross impaired
financing ratio reducing from 2.8%
(on proforma basis) to 1.8% in
the financial year, notably lower
than the industry average. As well,
HLISB maintained a healthy RiskWeighted Capital Adequacy Ratio of
13.5%, underlining its strong capital
position.
Pre-tax profits increased by RM114.2
million, or 127%, to RM204.2
million from RM90.1 million while
profit after tax increased by RM82.2
18
(continued)
million, or 122%, to RM149.7 million
from RM67.5 million previously. This
more than doubled the Earnings Per
Share (EPS) figure to 27.23 sen from
13.50 sen previously.
The strong financial performance
of the bank demonstrates the solid
underlying fundamentals of our
core businesses and diversification
into new areas such as investment
banking and government segments.
We are continuing to focus our efforts
on increasing operational efficiencies.
Optimising and Innovating
Branches and Channels
As consumers become more reliant
on technology as a means to live,
work and play, access to technology
is now weaved into every facet of
their lives. The adoption of technology
has forced the convergence of branch
banking and electronic channels, and
necessitates an integrated approach
to the development of branches
and digital channels concurrently.
Cognisant of the importance of this and
the fundamental shift in consumer
lifestyle, the Bank spearheaded
a new concept of “bricks and clicks”
with Mach by Hong Leong Bank, the
first retail banking concept catered
specifically to the “Generation Y”
market segment. Mach by Hong
Leong Bank, now available in Mid
Valley Megamall, IOI Mall, e@
Curve and Paradigm Mall, features
non-intrusive high tech self-service
concepts, customisable services
and eco-friendly processes that are
both convenient and fast. Work is in
progress to enlarge this distribution
model network in the months ahead
as the franchise scale its distribution
coverage to this growing market
segment.
The past year also saw us launch
Hong Leong Connect Mobile Banking
application, the first such transactional
mobile banking application providing
customers location-aware services on
all the top three most popular smart
phone platforms namely Apple iPhone,
Android and BlackBerry.
Our self-service terminals grew from
815 units to more than 1500 units,
including presence at more than 110
offsite locations nationwide. Effective
May 2012, we have a consolidated
base of more than 300,000 online
users serviced out of a single platform.
Meanwhile, we are in the midst
of implementing our first phase of
branch rationalisation. We had made
a conscious decision to sustain
and stabilise our combined branch
network in the first year of our merger
despite having overlapping branches
within close proximity to focus on
integration of IT systems and people
embedment. Now, we are taking
steps to rationalise our branches
towards delivering the twin benefits
of eliminating customer confusion
and extracting branch synergies. We
have plans to open new branches so
that the franchise continues to grow
its branch banking revenue by serving
new communities and townships at
new economic growth area.
Strategic plans are also in place and
in progress to further improve branch
productivity and transform our
customer reach into a community
enabled distribution centre to
better serve the community. This
includes
improving
customer
service processes, automation of
transactions and fulfilments.
Regional Franchise
Profit contribution from Bank of
Chengdu (“BOCD”) for FY2012
grew by 2.8% year-on-year to
RM217 million, representing 10.3%
of the Bank’s profit before tax.
BOCD continued to leverage on its
strong franchise network, expanded
customer base and new core IT
platform delivering stronger and more
sustainable business momentum. It
recorded strong financial results in
its financial year ended 31 December
2011. BOCD’s net profit grew
significantly by 48.0% to RMB2.4
billion from RMB1.6 billion in the
past year whilst its total assets
expanded by 19.9% year-on-year to
RMB181.4 billion. Customer deposits
rose by 10.1% to RMB134.8 billion
while gross loans grew by 18.8%
to RMB80.6 billion. Loan-to-deposits
ratio for BOCD remained healthy
at 59.8%, loan loss coverage ratio
improved further to 429.0% and
return on equity was 24.3%.
Over in Vietnam, we are proud to
announce that Hong Leong Bank
Vietnam (“HLVN”) had turned
profitable amidst a very challenging
and fragile economic condition
over the last three years. Since it
commenced operations in Ho Chi
Minh City in October 2009, HLVN
had expanded its network to 3
outlets. Our priority now is to build on
its growth to up-scale the franchise.
Elevating Customer
Experience and Embedding
Business Intelligence
Analytics
Clearly, the differentiation in customer
experience will be those that deliver
consistent quality service.
We have to stay agile to elevate
our service standards in anticipation
of ever demanding customer
expectations. It will always be that
sometimes, we will have to respond
to recover the occasional failures in
our network to achieve our mantra
of quality service. Service recovery
is an integral part of our customer
service quality management.
We are deepening our focus on key
steps to ensure that we are amongst
the winners of an enlightened
customer experience.
19
(continued)
20
(continued)
Joyce Wong, Segmentation Usage Manager from Unsecured Lending
Towards this end, we are embarking
on a major review of all our key
end-to-end business processes and
will redesign these as needed to
ensure that we give our customers
experiences that are simple and
convenient, personal and consistent.
Post our successful merger
integration, we will now focus our IT
investment in supporting these new
streamline processes.
A key element of the changing
customer behaviours which we
are already witnessing and believe
to grow over the next 5 years, is
the greater use of digital channels
in conjunction with the traditional
channels such as branches. This is
what we call channel convergence.
Customers will use the convenience
and the power of the digital world to
become exceedingly informed and
demanding. In the past, a customer
might visit our branch to enquire about
home loans. Now, the customer can
easily research offers online, see what
is being recommended on blog sites
and then approach us on what they
are looking for. On a daily basis, we
see customers visiting their nearest
branch to quickly deposit a few
cheques at the self-service terminal
and later use their smart phones to
transfer their money around.
At HLB, we anticipate this
development by placing all our
distribution channels under one
executive position and linking our
development of digital (online,
mobile and social media) under our
traditional channels - telephone and
branches. We believe this integrated
approach to the management of
channels is quickly becoming a
necessity for all leading banks.
The final key lever of this development
for HLB is customer insight and
analytics. Not only do we need to
know how customers are behaving
in their interactions with us but the
question why. With these insights,
we can predict the likelihood of
whether our products and services are
strongly aligned to delivering what our
customers need and want. For example,
we can use deep understanding of
customer behaviour patterns to offer
them lines of credit almost before they
know they need them. We are making
significant investments in this area,
again supported by smart information
technology.
to time to manage the Bank’s risk,
capital and business strategy, while
the Bank’s high retail deposit profile
in the industry is also well placed to
meet the new liquidity requirements
of Basel III when the requirements
come in force in 2015.
In the new financial year, the Bank
will be adopting the new International
Financial Reporting Standard (“IFRS”)
compliance framework, the latest
Malaysian Financial Reporting
Standards (“MFRS”) which are in
line with the standards issued by the
International Accounting Standards
Board (“IASB”), in an effort to
promote better transparency and
disclosure requirements for the Bank.
Enhancing Risk Management
To ensure sustainability and stability,
HLB has remained vigilant in
ensuring good governance and risk
management in the running of our
business. Accordingly, we had put
in place Basel III capital requirements
and ICAAP framework to continue
our disciplined risk approach in
protecting and conserving the
Bank’s capital and liquidity position.
The yearly ICAAP process would
determine
the
Bank’s
capital
management activities from time
Izyan Farhana,
Customer Service Executive
from Contact Centre
21
(continued)
The Way Forward
Globally, economic and monetary
policy challenges are moving fast.
Asia, in particular South-East Asia
continues to benefit from strong
economic growth and market
momentum on the back of robust
economic fundamentals and sound
policy management. In Malaysia, I
believe that the country will continue
to see a steady pace of growth in
the next year, led by increase in
investments and resilient domestic
consumption. However, the banking
industry will remain challenging with
increased regulations and intense
competition from excess liquidity
in the system and entry of new
competitors.
For us at HLB, our transformation
journey continues. Having laid the
foundational blocks for synergies of
our integration, we will continue to
re-engineer ourselves as a customercentric bank while scaling efficiencies
as well as pursuing value creations
in support of the country’s economic
transformation and expand our
regional footprints in tandem with
the ASEAN 2015 agenda.
We remain focused and committed
to building strong, long-term
relationships with our customers,
delivering sustainable returns and
value to all our stakeholders and
staying agile, nimble and relevant to
take the Group to the next level. I am
confident that we are able to achieve
these through leveraging fully on the
expanded and growing franchise.
Investing in Our People,
Our Future
The cornerstone of the Group’s
achievements
had
been
the
collective effort of our people,
who will continue to be the
driving force of our success.
Part of the dynamic team
behind Mach by Hong Leong Bank
Hong Leong Bank members
from across the Bank
Having journeyed together with
our expanded family, I am deeply
encouraged by the calibre and
quality of the team. We have been
able to achieve so much because of
their professionalism, unwavering
passion and commitment to make
things happen.
Most Improved Service For An
Investor Relations Team”
• The Asset Benchmark Research
ranked HLB first for “Most
Astute Investors in Asian G3
Denominated Bonds”
Indeed, people make the difference
and the ability to attract and retain
talent whilst maintaining a highperformance and positive work
culture are critical to our ability to
drive continued business growth,
the high standards of customer
service and product excellence.
Read more on our employee
development programmes on page
29.
Acknowledgements
The Team has garnered further
awards from the industry during
the year:
(See page 7 for full list)
Sincerely,
• Malaysian Investors’ Relations
Award (MIRA)’s award for “The
On that note, I would like to thank
all our customers, the Management
team and fellow colleagues, shareholders,
Board of Directors, Bank Negara
Malaysia, the Ministry of Finance, as
well as Government agencies and
other authorities, for their continued
support and confidence in the Group.
Yvonne Chia
Group Managing Director/
Chief Executive
20 September 2012
22
Statements
of Financial Position
as at 30 June 2012
The Group
Note
Assets
Cash and short-term funds
Deposits and placements with banks and other
financial institutions
Securities purchased under resale agreements
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans, advances and financing
Other assets
Derivative financial instruments
Amount due from subsidiaries
Statutory deposits with Bank Negara Malaysia
Investment in subsidiary companies
Investment in jointly controlled entity
Investment in associated company
Property and equipment
Intangible assets
Goodwill
Deferred tax assets
Total assets
Liabilities
Deposits from customers
Deposits and placements of banks and other
financial institutions
Obligations on securities sold under repurchase
agreements
Bills and acceptances payable
Derivative financial instruments
Other liabilities
Senior bonds
Tier 2 subordinated bonds
Tier 2 capital cumulative subordinated loan
Non-innovative Tier 1 stapled securities
Innovative Tier 1 capital securities
Taxation
Deferred tax liabilities
Total liabilities
Equity
Share capital
Reserves
Less: Treasury shares
Total equity
3
4
5
6
7
8
9
20
10
11
12
13
14
15
16
57
17
18
19
20
21
22
23
24
25
26
17
27
28
29
Total equity and liabilities
Commitments and contingencies
42
The Bank
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
19,636,026
30,476,610
18,410,084
17,349,793
4,565,819
5,415,383
4,414,150
590,521
86
590,521
21,746,847
6,023,147
17,687,270
9,934,316
6,007,635
8,406,844
3,670,198
7,787,412
3,814,884
88,193,091
81,455,336
75,997,167
541,593
968,370
424,756
955,350
790,162
1,027,682
615,390
3,331,437
2,201,874
2,880,250
2,081,933
76,871
75,252
76,711
1,540,288
1,325,707
946,505
727,096
697,266
701,018
446,497
379,422
437,850
1,831,312
1,831,312
1,771,547
63,907
157,787,262 145,498,881 140,284,562
6,131,473
86
4,471,896
2,536,925
7,922,570
38,548,822
428,826
802,776
844,671
988,900
6,088,873
76,711
946,505
349,445
59,536
102,281
87,650,089
123,095,643 114,856,543 108,939,695
65,924,094
10,697,661
7,877,364
5,820,144
633,797
633,797
486,091
683,996
434,780
1,069,227
666,706
1,125,756
2,739,688
2,934,132
2,664,418
1,907,793
910,810
1,907,793
4,389,859
2,905,578
4,389,251
2,314,080
1,407,283
1,405,706
1,407,283
574,581
595,720
573,115
163,080
60,184
118,651
110,213
114,148
146,367,951 138,031,116 130,186,051
350,474
672,967
1,912,498
910,810
1,713,260
2,314,080
1,405,706
58,930
81,082,963
9,790,696
1,879,909
8,933,394
(714,792)
10,098,511
1,580,107
5,658,763
(671,744)
6,567,126
157,787,262 145,498,881 140,284,562
87,650,089
1,879,909
10,254,194
(714,792)
11,419,311
1,580,107
6,559,402
(671,744)
7,467,765
148,989,018 138,279,839 146,771,470 115,912,569
23
Statements
of Income
for the financial year ended 30 June 2012
The Group
Note
Interest income
Interest expense
Net interest income
Income from Islamic Banking business
Non-interest income
Net income
Overhead expenses
Operating profit before allowances
Allowance for impairment losses on loans,
advances and financing
Write back of impairment losses
Share of results of associated company
Share of results of jointly controlled entity
Profit before taxation and zakat
Taxation and zakat
Net profit for the financial year
30
31
32
33
34
35
14
13
38
Attributable to:
Owners of the parent
Earnings per share for profit attributable to
owners of the parent (sen):
- basic
- diluted
39
39
The Bank
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
5,441,052
(2,839,236)
2,601,816
447,598
3,049,414
844,279
3,893,693
(1,924,896)
1,968,797
3,254,984
(1,599,058)
1,655,926
227,090
1,883,016
668,695
2,551,711
(1,211,536)
1,340,175
5,493,832
(2,942,252)
2,551,580
2,551,580
882,199
3,433,779
(1,712,365)
1,721,414
2,952,529
(1,501,193)
1,451,336
1,451,336
689,468
2,140,804
(966,544)
1,174,260
(111,180)
32,702
1,890,319
216,960
1,619
2,108,898
(460,742)
1,648,156
(137,274)
2,094
1,204,995
210,992
(771)
1,415,216
(277,770)
1,137,446
(76,689)
29,263
1,673,988
1,673,988
(426,708)
1,247,280
(95,694)
1,078,566
1,078,566
(271,073)
807,493
1,648,156
1,137,446
1,247,280
807,493
99.2
98.9
78.3
77.8
75.1
74.8
55.6
55.3
24
Statements
of Comprehensive Income
for the financial year ended 30 June 2012
The Group
2011
RM’000
2012
RM’000
2011
RM’000
1,648,156
1,137,446
1,247,280
807,493
(22)
6,068
(24)
(39,161)
(11,038)
623
41
109,079
8,113
106,144
14,660
41
(27,270)
(2,028)
(26,536)
(3,665)
87,855
(33,100)
68,570
11,618
1,736,011
1,104,346
1,315,850
819,111
Note
Net profit for the financial year
Other comprehensive income/(loss):
Share of other comprehensive income
of associated company and jointly
controlled entity
Currency translation difference
Net fair value changes on financial
investments available-for-sale
Income tax relating to components of other
comprehensive loss
Other comprehensive income/(loss) for the
financial year, net of tax
Total comprehensive income for the
financial year, net of tax
The Bank
2012
RM’000
25
Notice
of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Seventy-First Annual General Meeting of Hong Leong Bank Berhad (“Bank”)
will be held at the Theatrette, Level 1, Wisma Hong Leong, 18 Jalan Perak, 50450 Kuala Lumpur on Thursday,
25 October 2012 at 2.30 p.m. in order:
1. To lay before the meeting the audited financial statements together with the reports of
the Directors and Auditors thereon for the financial year ended 30 June 2012.
2. To declare a final dividend of 27 sen per share less income tax of 25% for the financial
year ended 30 June 2012 to be paid on 20 November 2012 to members registered in
the Record of Depositors on 2 November 2012.
(Resolution 1)
3. To approve the payment of Directors’ fees of RM810,000 for the financial year ended
30 June 2012 (2011: RM594,576), to be divided amongst the Directors in such manner
as the Directors may determine.
(Resolution 2)
4. To re-elect the following retiring Directors:(a)
(b)
(c)
(d)
Mr Kwek Leng Hai
YBhg Datuk Yvonne Chia
YBhg Datuk Kwek Leng San
Ms Lim Lean See
5. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Bank and authorise the
Directors to fix their remuneration. (Resolution
(Resolution
(Resolution
(Resolution
3)
4)
5)
6)
(Resolution 7)
SPECIAL BUSINESS
As special business, to consider and, if thought fit, pass the following motions as Ordinary
Resolutions:6. Authority To Directors To Issue Shares
“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and
are hereby empowered to issue shares in the Bank, at any time and from time to time,
and upon such terms and conditions and for such purposes as the Directors may, in
their absolute discretion, deem fit, provided that the aggregate number of shares issued
pursuant to this resolution does not exceed 10% of the issued capital of the Bank for the
time being and that the Directors be and are also empowered to obtain approval for the
listing of and quotation for the additional shares so issued on Bursa Malaysia Securities
Berhad and that such authority shall continue in force until the conclusion of the next
Annual General Meeting of the Bank.”
7. Proposed Renewal Of Shareholders’ Mandate On Recurrent Related Party Transactions
Of A Revenue Or Trading Nature With Hong Leong Company (Malaysia) Berhad (“HLCM”)
And Persons Connected With HLCM
“THAT approval be and is hereby given for the Bank and/or its subsidiaries to enter into
any of the transactions falling within the types of recurrent related party transactions
of a revenue or trading nature as disclosed in Section 2.3(A) and (B), Part A of the
Bank’s Circular to Shareholders dated 3 October 2012 (“the Circular”) with HLCM and
persons connected with HLCM, as set out in Appendix II of the Circular provided that
such transactions are undertaken in the ordinary course of business, on arm’s length
basis and on commercial terms which are not more favourable to the related party than
those generally available to and/or from the public and are not, in the Bank’s opinion,
detrimental to the minority shareholders; AND THAT the Directors of the Bank be and are
hereby authorised to complete and to do all such acts and things (including executing all
such documents as may be required) as they may consider expedient or necessary to give
effect to the transactions contemplated and/or authorised by this ordinary resolution.
AND THAT such approval shall continue to be in force until:
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Bank at which
time it will lapse, unless by a resolution passed at the meeting, the authority is
renewed; or
(Resolution 8)
26
Notice
(continued)
(b) the expiration of the period within which the next AGM of the Bank after that date is
required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall
not extend to such extension as may be allowed pursuant to Section 143(2) of the
Companies Act, 1965); or
(c) revoked or varied by resolution passed by the shareholders in general meeting,
whichever is the earlier.”
(Resolution 9)
8. Proposed Establishment Of A New Executive Share Option Scheme Of Up To 10% Of
The Issued And Paid-Up Ordinary Share Capital (Excluding Treasury Shares) Of The
Bank
“THAT, subject to the requisite approvals being obtained, the Directors of the Bank be
and are hereby authorised:
(i) to establish and administer an executive share option scheme (“Scheme”) for
the benefit of eligible executives and/or Directors of the Bank and its subsidiaries
(“Eligible Executives”) under which offers of options will be granted to such Eligible
Executives to subscribe for/purchase ordinary shares of RM1.00 each (“Shares”) in
the Bank in accordance with the provisions of the Bye-Laws referred to in Part B of
the Circular to Shareholders dated 3 October 2012 (“Bye-Laws”);
(ii) from time to time to issue and allot such number of new Shares (unless otherwise
adjusted) (“New Shares”) and/or to transfer existing Shares (“Transferred Shares”)
to Eligible Executives pursuant to their exercise of the options under the Scheme,
provided that the aggregate number of New Shares and/or Transferred Shares does
not exceed 10% of the total issued and paid-up ordinary share capital (excluding
treasury shares) of the Bank at any point in time during the existence of the
Scheme and that the New Shares shall, upon issuance and allotment, rank pari
passu in all respects with the existing issued and paid-up ordinary share capital
of the Bank, except that the New Shares will not rank for any dividend, right,
entitlement or distribution (“Rights”) in respect of which the record date precedes
the allotment date of the New Shares; and for Transferred Shares, such shares shall
be transferred together with all Rights in respect of which the record date is on or
after the transfer date; and such New Shares and Transferred Shares will be subject
to all the provisions of the Articles of Association of the Bank relating to transfer,
transmission and otherwise;
(iii) to make the necessary applications to Bursa Malaysia Securities Berhad and to take
whatever necessary actions at the appropriate time or times for permission to deal
in and for listing of and quotation for the New Shares which may from time to time
be issued and allotted pursuant to the Scheme; and
(iv) to modify and/or amend the Scheme from time to time provided that such
modification and/or amendment is effected in accordance with the provisions of
the Bye-Laws, to assent to any condition, modification, variation and/or amendment
that may be required by the relevant authorities, and to do all such acts and enter
into all such transactions, arrangements, agreements or undertakings, impose such
terms and conditions or delegate such part of their powers as may be necessary or
expedient in order to give full effect to the Scheme.”
(Resolution 10)
27
Notice
(continued)
9. Proposed Grant Of Options To YBhg Datuk Yvonne Chia
“THAT, contingent upon the passing of Ordinary Resolution 10 above, authority be and
is hereby given to the Directors of the Bank, from time to time, to offer and to grant to
YBhg Datuk Yvonne Chia, the Group Managing Director/Chief Executive of the Bank,
options to subscribe for/purchase such number of ordinary shares of RM1.00 each in the
Bank (unless otherwise adjusted) under the executive share option scheme of the Bank
(“Scheme”) as they shall deem fit PROVIDED THAT not more than 10% of the Maximum
Aggregate, the “Maximum Aggregate” being defined in the Bye-Laws of the Scheme as
an amount equivalent to 10% of the issued and paid-up ordinary share capital (excluding
treasury shares) of the Bank at any one time, are allotted to her if she, either singly or
collectively through persons connected with her, holds 20% or more of the issued and
paid-up ordinary share capital of the Bank (excluding treasury shares) subject always to
such terms and conditions and/or any adjustment which may be made in accordance
with the provisions of the Bye-Laws of the Scheme.”
(Resolution 11)
10. To consider any other business of which due notice shall have been given.
FURTHER NOTICE IS HEREBY GIVEN that a depositor shall qualify for entitlement to the final
dividend only in respect of:
(a) shares transferred into the depositor’s securities account before 4.00 p.m. on
2 November 2012 in respect of ordinary transfers; and
(b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis
according to the Rules of the Bursa Malaysia Securities Berhad.
By Order of the Board
CHRISTINE MOH SUAT MOI
(MAICSA 7005095)
Group Company Secretary
Kuala Lumpur
3 October 2012
NOTES:
1.
For the purpose of determining members’ eligibility to attend this meeting, only members whose names appear in the Record of
Depositors as at 18 October 2012 shall be entitled to attend this meeting or appoint proxy(ies) to attend and vote on their behalf.
2.
Save for a member who is an exempt authorised nominee, a member entitled to attend and vote at the meeting is entitled to
appoint not more than two proxies to attend and vote in his stead. A proxy may but need not be a member of the Bank and
the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Bank. A member who is an authorised
nominee may appoint not more than two proxies in respect of each securities account it holds.
3.
A member who is an exempt authorised nominee for multiple beneficial owners in one securities account (“Omnibus Account”)
may appoint any number of proxies in respect of the Omnibus Account.
4.
The Form of Proxy must be deposited at the Registered Office of the Bank at Level 8, Wisma Hong Leong, 18 Jalan Perak,
50450 Kuala Lumpur not less than 48 hours before the time and date of the meeting or adjourned meeting.
28
Notice
(continued)
EXPLANATORY NOTES ON SPECIAL BUSINESS
1.
Ordinary Resolution 8 On Authority To Directors To Issue Shares
The proposed Ordinary Resolution, if passed, will give a renewed mandate to the Directors of the Bank to issue ordinary shares
of the Bank from time to time provided that the aggregate number of shares issued pursuant to this resolution does not exceed
10% of the issued capital of the Bank for the time being (“Renewed Mandate”). The Renewed Mandate, unless revoked or
varied at a general meeting, will expire at the conclusion of the next Annual General Meeting (“AGM”) of the Bank.
As at the date of this Notice, 299,802,066 new ordinary shares of RM1.00 each in the Bank were issued by way of
renounceable rights issue (“Rights Issue”) pursuant to the Specific Mandates granted to the Directors at the last AGM held on
25 October 2011. The proceeds of RM2,593,287,870.90 million raised from the Rights Issue have been utilised for repayment
of Tier 2 Capital Cumulative Subordinated Loan facility, working capital and expenses incidental to the Rights Issue. No new
shares in the Bank were issued pursuant to the General Mandate granted to the Directors at the last AGM held on 25 October
2011 and which will lapse at the conclusion of the Seventy-First AGM.
The Renewed Mandate will enable the Directors to take swift action in case of, inter alia, a need for corporate exercises or in
the event business opportunities or other circumstances arise which involve the issue of new shares and to avoid delay and
cost in convening general meetings to approve such issue of shares.
2. Ordinary Resolution 9 On Recurrent Related Party Transactions Of A Revenue Or Trading Nature
The proposed Ordinary Resolution, if passed, will empower the Bank and its subsidiaries (“HLB Group”) to enter into recurrent
related party transactions of a revenue or trading nature which are necessary for HLB Group’s day-to-day operations, subject to
the transactions being in the ordinary course of business and on terms which are not more favourable to the related parties than
those generally available to the public and are not, in the Bank’s opinion, detrimental to the minority shareholders of the Bank
(“Proposed Renewal of Shareholders’ Mandate”).
3.
Ordinary Resolution 10 On Proposed Establishment Of A New Executive Share Option Scheme (“ESOS”)
The proposed Ordinary Resolution, if passed, will allow the Bank to establish a new ESOS (“Proposed New ESOS”) for eligible
executives and/or Directors of the Bank and its subsidiaries (“Eligible Executives”) to participate in the equity of the Bank. The
Proposed New ESOS will run concurrently with the existing ESOS which will expire in 2016, and empower the Bank to issue
and allot from time to time such number of new ordinary shares of RM1.00 each in the Bank (“Shares”) (unless otherwise
adjusted) and/or transfer existing Shares to Eligible Executives pursuant to the exercise of their options under the Proposed New
ESOS.
4.
Ordinary Resolution 11 On Proposed Grant Of Options To YBhg Datuk Yvonne Chia
The proposed Ordinary Resolution, if passed, will allow the Directors of the Bank to offer and grant to YBhg Datuk Yvonne
Chia, options to subscribe for/purchase such number of ordinary shares of RM1.00 each in the Bank (unless otherwise adjusted)
under the Proposed New ESOS.
Detailed information on the Proposed Renewal of Shareholders’ Mandate, Proposed New ESOS and Proposed grant of options
to YBhg Datuk Yvonne Chia are set out in the Circular to Shareholders dated 3 October 2012 which is dispatched together with
the Bank’s 2012 Annual Report.
Statement
Accompanying Notice Of
Annual General Meeting
(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad)
•
Details of individuals who are standing for election as Directors
No individual is seeking election as a Director at the forthcoming Seventy-First Annual General
Meeting of the Bank.
(97141-X)
FORM OF PROXY
I/We NRIC/Passport/Company No. of being a member of HONG LEONG BANK BERHAD (the “Bank”), hereby appoint NRIC/Passport No. of or failing him/her NRIC/Passport No. of or failing him/her, the Chairman of the meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the
Seventy-First Annual General Meeting of the Bank to be held at the Theatrette, Level 1, Wisma Hong Leong, 18
Jalan Perak, 50450 Kuala Lumpur on Thursday, 25 October 2012 at 2.30 p.m. and at any adjournment thereof.
My/Our proxy/proxies is/are to vote either on a show of hands or on a poll as indicated below with an “X”:
RESOLUTIONS
1.
To declare a final dividend of 27 sen per share less tax
2.
To approve the payment of Directors’ fees
3.
To re-elect Mr Kwek Leng Hai as a Director
4.
To re-elect YBhg Datuk Yvonne Chia as a Director
5.
To re-elect YBhg Datuk Kwek Leng San as a Director
6.
To re-elect Ms Lim Lean See as a Director
7.
To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Bank and
authorise the Directors to fix their remuneration
Special Business
8.
To approve the ordinary resolution on Authority To Directors To Issue Shares
9.
To approve the ordinary resolution on the Proposed Renewal of Shareholders’
Mandate on Recurrent Related Party Transactions of a Revenue or Trading
Nature with Hong Leong Company (Malaysia) Berhad (“HLCM”) and Persons
Connected with HLCM
10.
To approve the ordinary resolution on Proposed Establishment of a New Executive
Share Option Scheme of up to 10% of the Issued and Paid-Up Ordinary Share
Capital (Excluding Treasury Shares) of the Bank
11.
To approve the ordinary resolution on Proposed Grant of Options to YBhg Datuk
Yvonne Chia
FOR
AGAINST
Dated this …...............……………… day of ………………….…. 2012
Number of shares held
Signature(s) of Member
Notes:
1. For the purpose of determining members eligibility to attend this meeting, only members whose names appear in the Record of Depositors
as at 18 October 2012 shall be entitled to attend this meeting or appoint proxy(ies) to attend and vote on their behalf.
2. If you wish to appoint other person(s) to be your proxy, insert the name(s) and address(es) of the person(s) desired in the space so
provided.
3. If there is no indication as to how you wish your vote(s) to be cast, the proxy will vote or abstain from voting at his/her discretion.
4. A proxy may but need not be a member of the Bank and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply
to the Bank.
5. Save for a member who is an exempt authorised nominee, a member shall not be entitled to appoint more than two proxies to attend and
vote at the same meeting. Where two or more proxies are appointed, the proportions of shareholdings to be represented by each proxy
must be specified in order for the appointments to be valid (please see note 9 below). Where a member of the Bank is an authorised
nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint not more than two (2) proxies in respect
of each securities account it holds with ordinary shares of the Bank standing to the credit of the said securities account.
6. A member who is an exempt authorised nominee for multiple beneficial owners in one securities account (“Omnibus Account”) may
appoint any number of proxies in respect of the Omnibus Account.
7. In the case where a member is a corporation, this Form of Proxy must be executed under its Common Seal or under the hand of its Attorney.
8. All Forms of Proxy must be duly executed and deposited at the Registered Office of the Bank at Level 8, Wisma Hong Leong, 18 Jalan
Perak, 50450 Kuala Lumpur not less than 48 hours before the time and date of the meeting or adjourned meeting.
9. In the event two (2) or more proxies are appointed, please fill in the ensuing section:
Name of Proxies
% of shareholdings to be represented
Then Fold Here
AFFIX
STAMP
The Group Company Secretary
Hong Leong Bank Berhad
(Company No. 97141-X)
18 Jalan Perak
50450 Kuala Lumpur
Malaysia
1st Fold Here
(97141-X)
REQUEST FORM
To : Corporate Affairs & PR Department
18, Jalan Perak
50450 Kuala Lumpur
Malaysia
Contact person Email
Telephone No.
Facsimile No.
:
:
:
:
Marziah Mohamed
marziah.mohamed@hlbb.hongleong.com.my
603-2164 2828 (ext 8563)
603-2732 7902
Hong Leong Bank website : www.hlb.com.my
Please send me a printed copy of Hong Leong Bank Berhad 2012 Annual Report.
Name of Shareholder:
I.C./Passport/Company No.:
CDS Account No.:
Correspondence Address:
Telephone No.:
………………………………………….……………….……………
………………………………………….……………….……………
………………………………………….……………….……………
………………………………………….……………….……………
………………………………………….……………….……………
………………………………………….……………….……………
………………………………………….……………….……………
Signature of Shareholder
……………………………………………
Date
Note to Shareholders:
The printed copy of the Annual Report will be forwarded to you within 4 market days from the date
of receipt of your request.
Then Fold Here
AFFIX
STAMP
Corporate Affairs & PR Department
Hong Leong Bank Berhad
(Company No. 97141-X)
18 Jalan Perak
50450 Kuala Lumpur
Malaysia
1st Fold Here

annual report 2012

Transcription

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