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HONG Leong Bank Bhd (HLBB), the country's fourth largest banking group, reported a 61 per cent rise in third quarter net profit, beating analysts' expectations. The results for that quarter reflected that of a larger group as it had bought rival EON Capital Bhd on May 6 last year. Net profit, which was also boosted by a higher share of profit from its associate Bank of Chengdu, was up by 12 per cent over pro-forma consolidated pre-merger accounts. "The group's earnings reflect an increased diversification of business activities, expanding national presence, and resilience to challenges arising from an uncertain global economic environment," group managing director Datuk Yvonne Chia said in a statement, adding that a full merger integration was "on track". Net profit for the nine months to date came in at RM1.2 billion compared with RM838.3 million before. Analysts expect to turn in a full year net profit of around RM1.5 billion. "The third quarter came in above expectations. But going forward, margins will continue to be under pressure. The group is rebalancing its loan portfolio and we believe will phase out low-quality loans," said an analyst from a foreign research firm who attended the group's briefing for analysts yesterday. HLBB's net interest margin, or the difference between what it earns on loans and pays out on deposits, fell to 2.13 per cent from 2.35 per cent in the previous quarter amid the competitive landscape. Chia, commenting on the business outlook, said despite uncertainties in Europe, the group is optimistic of Malaysian domestic investment and consumption to spur growth. HLBB's net interest income for the quarter rose by 77 per cent to RM755 million while non-interest income grew by 12 per cent to RM253 million. Meanwhile, its Islamic bank - Hong Leong Islamic Bank - saw third quarter net profit grow by 107 per cent from a year ago to RM103.3 million. Its parent company, Hong Leong Financial Group Bhd (HLFG), reported a 49 per cent rise in net profit to RM394.8 million. Shares of HLBB eased 12 sen in the stock market yesterday to RM11.98, while HLFG's shed 4 sen to RM11.72.

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