Hong Leong Bank's loan growth to accelerate to 10%

Thanks to SME mortgages.

According to Nomura, Hong Leong bank declared its full year earnings of MYR1.86bn which was 7% below forecast and 3% below consensus estimates. The disappointment came main from a weak loan growth of 7% and a NIM decline of 17bps as management continues to de-risk the auto loan portfolio.  

Here's more from Nomura:

Loan growth to accelerate to 10% driven by SME (especially those involved in ETP related projects), mortgages (larger loan ticket sizes).

NIMs are likely to stay above 2.0% aided by a higher LD ratio (loan growth to outpace deposit growth).

Cost income ratio target of 42-45% as the bank emphasises higher use of electronic banking by its customers.

Over the next 2-3 years, cost income is projected to fall to 40%.

Credit cost expected to revert to a normalised rate of 25-30bps in the absence of NPL recoveries. Management appears confident of the quality of its loan portfolio but will be watching monitoring the impact of an eventual rise in global interest rates.

ROEs expected to land between 15-17%.