HSBC Bank Malaysia Berhad 1Q 2013 Results

 

 

 

17 June 2013

 

 

HSBC BANK MALAYSIA BERHAD

RESULTS FOR THE QUARTER ENDED

31 MARCH 2013 - HIGHLIGHTS

 

·    Profit before tax for the three months ended 31 March 2013 was MYR381m, a decrease of MYR57m or 13.0% compared with the same period in 2012.

 

·    Operating income before loan impairment charges and other risk provisions reduced to MYR736m, a decrease of MYR32m or 4.1% compared with the same period in 2012.

 

·     Loan impairment charges and other credit risk provisions increased by MYR43m or 106.4% compared with the same period in 2012 primarily on higher net collective impairment provisions.

 

·    Cost efficiency ratio for the three months ended 31 March 2013 improved to 36.8% from 37.7% for the same period in 2012.

 

·    Total assets of MYR78.8bn at 31 March 2013 increased from MYR76.6bn at 31 December 2012 (31 March 2012: MYR73.2bn).

 

·    Core capital ratio and risk-weighted capital ratio remain strong at 10.5% and 13.2% respectively at 31 March 2013.

 

 

The financial statements of HSBC Bank Malaysia Berhad have been prepared in accordance with the applicable approved accounting standards issued by the Malaysian Accounting Standards Board.

 

 

 

 

 

 

CEO Commentary

Mukhtar Hussain, Deputy Chairman and Chief Executive Officer of HSBC Bank Malaysia Berhad ('the Bank'), commented: "Profit before tax for the three months ended 31 March 2013 was MYR381m, a decrease of MYR57m or 13.0% compared with the same period last year on lower revenue and higher loan and financing impairment charges, the impact of which was cushioned by reduced operating expenses. The decline in revenue was mainly due to the slowdown in the economy in the first quarter stemming from uncertainties leading up to the Malaysian General Elections, whilst the increase in loan and financing impairment charges was mainly on higher collective impairment provisions. Despite the lower operating profits, the cost efficiency ratio showed an improvement, from 37.7% for the first three months of 2012 to 36.8% for the three months ended 31 March 2013. The ongoing global restructuring efforts resulted in a leaner organisational structure and helped reduce operating expenses."

 

Financial commentary

HSBC Bank Malaysia Berhad reported profit before tax of MYR381m for the first three months of 2013, a decrease of 13.0% or MYR57m compared with the same period in 2012. The decline was mainly due to an increase in loan and financing impairment charges of MYR43m or 106.4% and a decrease in operating income of MYR31m or 4.1%. The reduction was partially offset by lower operating expenses by MYR18m or 6.2%.

 

Loan impairment charges and other credit risk provisions for the three months ended 31 March 2013 increased to MYR83m, mainly because of higher net collective impairment provisions (up MYR49m compared to the same period in 2012) due to the expansion in the customer loans and financing portfolio (up MYR 2.5 billion since 31 March 2012), with 40% of the growth from mortgages  and the remaining 60% growth from corporate term and trade financing.

 

The contraction of non-fund income was the main reason for the decrease in operating income, the largest decline of which was seen in fee income for the current period, primarily due to higher fee income earned in first three months of 2012 on various corporate finance-related deals. Income from Islamic banking fell, mainly on lower gains from trading securities, but this was partially offset by higher foreign currency gains and trading net interest income. Meanwhile, net interest income improved on an

expanded average loan base during the three month period from December 2012 to March 2013 compared against December 2011 to March 2012.

 

Other operating expenses for the three months ended 31 March 2013 showed some improvement at MYR271m (a decrease of MYR18m or 6.2%) compared with the same period in 2012, mainly on lower personnel costs (down MYR18m or 11.7%) as on-going restructuring efforts resulted in a leaner organisational structure. As such, despite lower operating profits, the cost efficiency ratio shows an improvement, from 37.7% for first three months of 2012 to 36.8% for three months ended 31 March 2013.

 

Total balance sheet size increased by MYR2.2bn or 2.9% from MYR76.6bn at 31 December 2012 to MYR78.8bn at 31 March 2013mainly driven by higher deposits from customers (31 March 2013: MYR61.7bn; 31 December 2012: MYR59.9bn).

 

 

Media enquiries to Marlene Kaur at +603 2075 3351 or marlenekaur@hsbc.com.my

 

Notes to editors:

 

1. HSBC in Malaysia

HSBC Bank Malaysia Berhad was locally incorporated in 1984 and is a wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited (a company under the HSBC Group). In 2007, HSBC Bank Malaysia was the first locally incorporated foreign bank to be awarded an Islamic banking subsidiary licence in Malaysia, and HSBC Amanah Malaysia Berhad, a full-fledged Islamic bank wholly owned by HSBC Bank Malaysia, commenced operations in August 2008. HSBC in Malaysia has a network of 68 branches nationwide, of which 26 are HSBC Amanah Malaysia Berhad branches. In 2006, HSBC was the first foreign bank to be awarded a Takaful (Islamic insurance) license in Malaysia. HSBC Amanah Takaful (Malaysia) SdnBhd, a joint venture between HSBC Insurance (Asia Pacific) Holdings Limited (49% shareholding), Jerneh Asia Berhad (31% shareholding) and Employees Provident Fund Board of Malaysia (20% shareholding) commenced operations in August 2006.

 

2. The Hongkong and Shanghai Banking Corporation Limited

The Hongkong and Shanghai Banking Corporation Limited is the founding and a principal member of the HSBC Group which serves customers worldwide from around 6,600 offices in over 80 countries and territories in Europe, Hong Kong, Rest of Asia-Pacific, North and Latin America, and the Middle East and North Africa. With assets of US$2,681bn at 31 March 2013, the HSBC Group is one of the world's largest banking and financial services organisations.

 

 

 

 

 

 

 

Unaudited Condensed Statements of Financial Position at 31 March 2013

 

	Group			Bank
Figures in MYR '000s	31 Mar 2013	31 Dec 2012		31 Mar 2013	31 Dec 2012
Assets
Cash and short-term funds	14,770,098	12,663,437		12,542,370	11,014,117
Securities purchased under resale agreements	-	2,433,346		-	2,433,346
Deposits and placements with   banks and other financial institutions	4,879,492	2,992,993		6,518,984	4,645,468
Financial assets held-for-trading	3,863,443	4,597,107		3,457,364	4,414,598
Financial investments available-for-sale	8,966,883	7,546,325		7,760,978	6,281,042
Loans, advances and financing	42,158,494	42,265,895		33,696,849	33,782,016
Other assets	2,302,901	2,196,564		2,360,114	2,209,665
Statutory deposits with Central Bank	1,303,160	1,330,159		968,098	986,598
Investments in subsidiary companies	-	-		660,021	660,021
Property and equipment	362,215	369,194		335,078	341,355
Intangible assets	53,219	53,525		53,195	53,496
Deferred tax assets	178,882	176,014		137,416	134,541
Total assets	78,838,787	76,624,559		68,490,467	66,956,263
Liabilities
Deposits from customers	61,654,556	59,938,046		52,122,277	51,298,258
Deposits and placements of banks   and other financial institutions	6,243,450	6,117,046		6,231,326	6,007,271
Bills and acceptances payable	491,803	504,349		481,988	488,923
Other liabilities	2,726,578	2,646,149		2,844,454	2,625,929
Provision for taxation	33,154	14,168		28,966	10,861
Multi-Currency Sukuk Programme	500,000	500,000		-	-
Subordinated bonds	1,012,109	1,012,591		1,012,109	1,012,591
Total liabilities	72,661,650	70,732,349		62,721,120	61,443,833
Equity
Share capital	114,500	114,500		114,500	114,500
Reserves	5,762,637	5,477,710		5,354,847	5,097,930
Proposed dividend	300,000	300,000		300,000	300,000
Total equity attributable to shareholder of the   Bank	6,177,137	5,892,210		5,769,347	5,512,430
Total liabilities and equity	78,838,787	76,624,559		68,490,467	66,956,263
Commitments and Contingencies	135,443,837	126,997,325		132,941,223	124,988,502

 

 

 

 

 

 

 

 

 

 

Unaudited Condensed Statements of Profit or Loss and Other Comprehensive Income

For The Financial Period Ended 31 March 2013

 

			Group				Bank
			31 Mar 2013		31 Mar 2012 Restated*		31 Mar 2013		31 Mar 2012 Restated*
Figures in MYR'000s
Revenue			1,025,081		1,057,375		886,855		916,116
Interest income			569,041		572,815		578,544		589,675
Interest expense			(228,188)		(239,824)		(228,188)		(239,824)
Net interest income			340,853		332,991		350,356		349,851
Fee and commission income			113,736		134,118		113,736		134,118
Fee and commission expense			(10,648)		(6,125)		(10,648)		(6,125)
Net fee and commission income			103,088		127,993		103,088		127,993
Net trading income			150,828		160,550		150,113		160,910
Income from Islamic banking operations			127,371		140,096		-		-
Other operating income			13,527		5,758		44,462		31,413
Operating income before impairment losses			735,667		767,388		648,019		670,167
Loans / financing impairment charges and other credit risk provisions			(83,408)		(40,414)		(51,306)		(1,609)
Net operating income			652,259		726,974		596,713		668,558
Other operating expenses			(271,033)		(288,926)		(251,258)		(267,796)
Profit before income tax expense			381,226		438,048		345,455		400,762
Income tax expense			(97,316)		(112,038)		(88,427)		(102,645)
Profit for the period			283,910		326,010		257,028		298,117
Other comprehensive income
Revaluation reserve:
Cash flow hedge
	Effective portion of changes in fair value		(12)		(384)		(12)		(384)
	Net amount transferred to profit or loss		(96)		-		(96)		-
Fair value reserve
	Change in fair value		5,423		(3,841)		4,090		(3,502)
	Amount transferred to profit or loss		(7,631)		-		(7,631)		-
Income tax relating to components of other comprehensive income			579		960		912		875
Other comprehensive income for the period, net of income tax			(1,737)		(3,265)		(2,737)		(3,011)
Total comprehensive income for the period			282,173		322,745		254,291		295,106
Profit attributable to the owner of the Bank			283,910		326,010		257,028		298,117
Total comprehensive income attributable to the owner of the Bank			282,173		322,745		254,291		295,106
Basic earnings per MYR0.50 ordinary share			124.0 sen		142.4 sen		112.2 sen		130.2 sen

* 2012 figures restated due to changes in accounting policies. Full details are set out in Note 33 of HSBC Bank Malaysia Berhad's unaudited condensed interim financial statements dated 31 March 2013 which is available on www.hsbc.com.my