9th May 2008 09:15
HSBC Holdings PLC09 May 2008 HSBC BANK MALAYSIA BERHAD RESULTS FOR THE FIRST QUARTER 2008 - HIGHLIGHTS • Profit before taxation for the first quarter of 2008 was MYR348 million, 13.0 per cent higher than the MYR308 million reported for the same period in 2007. • Profit before allowance for losses on loans and financing increased by 25.7 per cent to MYR397 million for the three months ended 31 March 2008 compared with MYR316 million for the same period in 2007, mainly attributable to higher other operating income. • Other operating income in the first quarter of 2008 was up 49.2 per cent to MYR303 million (MYR203 million for the same period in 2007) as trading profits rose as a result of increased hedging activities by corporate customers stemming from the volatility of the Malaysian ringgit against other major currencies. • Allowance for losses on loans and financing of MYR49 million was up MYR41 million for the three months ended 31 March 2008 due to a lower rate of recoveries than in the same period in 2007. • Cost efficiency ratio for the three months ended 31 March 2008 improved to 38.1 per cent from 40.6 per cent for the corresponding period in 2007. • Total assets of MYR50.3 billion up MYR2.2 billion, or 4.4 per cent, at 31 March 2008 compared with MYR48.1 billion at 31 December 2007. Commentary HSBC Bank Malaysia Berhad posted strong growth in revenue of 17.6 per cent andprofit before allowance for losses on loans and financing of 25.7 per cent forthe three months ended 31 March 2008 compared to the corresponding period lastyear. There was an improvement in all major income streams, with other operatingincome being the main catalyst behind the growth figures. Pre-tax profit grew MYR40 million in the first quarter of 2008, an increase of13 per cent on the same period in 2007. This was despite the significantincrease in allowance for losses on loans and financing for the three monthsended 31 March 2008 when compared to the same period in 2007 which saw higherrecoveries in corporate lending portfolios. Net interest income for the three months ended 31 March 2008 grew by 2.6 percent or MYR7 million, to MYR281 million (three months to 31 March 2007: MYR274million). This was principally driven by an increase in lending, (up MYR2.8billion or 11.5 per cent to MYR26.8 billion at 31 March 2008 from MYR24.0billion at 31 March 2007), mainly in trade financing products, offset by tightermargins. Other operating income for the three months ended 31 March 2008 increased toMYR303 million, up 49.2 per cent or MYR100 million compared to the correspondingperiod in 2007. This was mainly a result of the increase of MYR74 million intrading profits recorded for the three months ended 31 March 2008 as theMalaysian ringgit remained volatile against other major currencies, resulting inhigher hedging activities by corporate customers. Other operating income wasfurther boosted by a gain of MYR22 million realised from the mandatory partialredemption of Visa Inc. ("Visa") shares pursuant to Visa's initial publicoffering in March 2008. Other operating expenses for the first three months of 2008 increased by 13.4per cent, or MYR29 million, to MYR245 million compared with the same period in2007 (MYR216 million) mainly due to higher personnel costs (up MYR18 million or16.6%) as the bank expanded its workforce, and other operating expenses. The cost efficiency ratio for the three months ended 31 March 2008 improved to38.1 per cent from 40.6 per cent in the same period last year as a result ofstronger growth in all major income streams while other operating expenses grewat a slower pace. Total assets as at 31 March 2008 grew by MYR2.2 billion or 4.4 per cent comparedto 31 December 2007. Customer deposits grew by MYR 2.4 billion or 6.5 per centduring the same period as liquidity in the banking sector remained high. Theincrease in assets was mainly attributable to higher holdings of securities heldfor trading, up MYR1.6 billion or 131.2 per cent to MYR2.9 billion compared to31 December 2007. Irene Dorner, deputy chairman and CEO of HSBC Bank Malaysia Berhad, commented:"HSBC Bank Malaysia Berhad continues to grow in all major income streams even asmargins remain tight due to intense competition and excess liquidity in thedomestic banking sector. The positive results reflect the confidence customershave in the HSBC brand and the success of the bank's broad based businessstrategy. "The Malaysian economy is projected to grow at between five and six per cent in2008 on the back of Malaysia's strong economic fundamentals, diversified exportsbase and the relatively low exposure of the local financial institutions to theUS sub-prime market. The bank remains in a good position to capitalise on futurebusiness opportunities. "The bank will continue to implement its organic growth strategy in areas withhigh potential, with particular focus on the setting up of its Islamic bankingsubsidiary, HSBC Amanah Malaysia Berhad, in the second half of 2008. The openingof new Islamic banking branches will expand the bank's geographical reach,enable it to enter a totally different market segment and allow it to increaseits competitive advantage in the local financial services industry." UNAUDITED CONDENSED BALANCE SHEET AS AT 31 MARCH 2008 Group Bank Figures in MYR '000s 31Mar08 31Dec07 31Mar08 31Dec07 Assets Cash and short-term funds 10,387,809 11,321,351 10,387,809 11,321,351Securities purchased under resale agreements 2,828,827 1,858,579 2,828,827 1,858,579Deposits and placements with banks and other financial institutions 1,258,003 1,448,953 1,258,003 1,448,953Securities held-for-trading 2,858,565 1,236,193 2,858,565 1,236,193Securities available-for- sale 3,504,848 4,272,517 3,504,848 4,272,517Loans, advances and financing 26,797,838 26,007,124 26,797,838 26,007,124Other assets 1,581,295 897,653 1,581,295 897,653Statutory deposits with Central Bank Malaysia 650,547 704,847 650,547 704,847Investment in subsidiaries - - 21 21Prepaid land lease payments 20,772 20,890 20,772 20,890Property, plant and equipment 252,688 258,290 252,688 258,290Intangible assets 44,538 41,869 44,538 41,869Deferred tax assets 75,932 69,675 75,932 69,675Total assets 50,261,662 48,137,941 50,261,683 48,137,962 Liabilities Deposits from customers 38,535,172 36,173,674 38,535,193 36,173,695Deposits and placements of banks and other financial institutions 4,115,989 4,583,066 4,115,989 4,583,066Bills and acceptances payable 491,949 627,730 491,949 627,730Other liabilities 2,196,800 1,815,550 2,196,800 1,815,550Recourse obligation on loans sold to Cagamas Berhad 743,675 759,101 743,675 759,101Provision for taxation 81,929 57,569 81,929 57,569Subordinated bonds 993,573 1,000,000 993,573 1,000,000Total liabilities 47,159,087 45,016,690 47,159,108 45,016,711 Shareholders' funds Share capital 114,500 114,500 114,500 114,500Reserves 2,988,075 2,756,751 2,988,075 2,756,751Proposed dividend - 250,000 - 250,000Shareholders' funds 3,102,575 3,121,251 3,102,575 3,121,251 Total liabilities and shareholders' funds 50,261,662 48,137,941 50,261,683 48,137,962 Commitments and contingencies 78,842,053 76,966,309 78,842,053 76,966,309 UNAUDITED CONDENSED INCOME STATEMENT FOR THE FIRST FINANCIAL QUARTER ENDED 31 MARCH 2008 Group and Bank Figures in MYR '000s 31Mar08 31Mar07 Revenue 906,307 770,798 Interest income 518,179 483,304 Interest expense (237,509) (209,614) Net interest income 280,670 273,690 Other operating income 302,550 202,794 Income from Islamic banking operations 58,388 55,040 Operating income 641,608 531,524 Other operating expenses (244,654) (215,689) Profit before allowance 396,954 315,835 Allowance for losses on loans and financing (48,911) (7,718) Profit before taxation 348,043 308,117 Taxation (95,054) (86,270) Profit attributable to shareholders 252,989 221,847 Earnings per MYR0.50 ordinary share- basic/diluted 110.5 sen 96.9 sen Note: The financial statements of HSBC Bank Malaysia Berhad have been preparedin accordance with the applicable approved accounting standards issued by theMalaysian Accounting Standards Board. 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