Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
- We visited Hong Leong Bank's (HLBB) new Community BusinessBanking Branch at Southgate and met with the Head of Business Banking Support,Regional Head and Branch Manager. Community Business Banking Branches arecommunity-based branches which are set up to serve the businesses within closeproximity to the branch, and are part of the planned re-investment of selectedbranches as dedicated centres to support the group's business bankingdivision.
Company Name: HONG LEONG BANK BHD
| Research House: AMMB | Price Call: BUY | Target Price: 14.10 |
- We visited Hong Leong Bank's (HLBB) new Community BusinessBanking Branch at Southgate and met with the Head of Business Banking Support,Regional Head and Branch Manager. Community Business Banking Branches arecommunity-based branches which are set up to serve the businesses within closeproximity to the branch, and are part of the planned re-investment of selectedbranches as dedicated centres to support the group's business bankingdivision.
- The new Southgate branch forms part of the earlier planned conversion of 48 of the mergedgroup's branches into new Community Business Banking Branch. We understand thatthat the new target is now 50, with 48 to be converted from the merged group's branches,and two new ones to be added. With the new Southgate branch, HLBB now has a totalbranch network of 330 branches, vs.329 previously.
- Besides the Community Business Banking Branches, there arealso another 39 Business Banking Centres which serve the larger commercialloans. These larger commercial loans are considered generally to be loans inexcess of RM4mil.
- The target segment for the smaller Community BusinessBanking Branches are familybased businesses with loan amounts of less thanRM4mil. We would consider this to be a new business segment for HLBB, aspreviously the group had not emphasised the utilisation of its branch networkbefore to reach out to the businesses in the vicinity.
- We understand the company is targeting to have at leasttwo credit officers in these Community Business Banking branches. Given thatthese are likely traditional familybased businesses, these credit officers aretrained in terms of assessment of cash flow for these businesses.
- We understand from our visit that so far, there have beenno major strains in the company's SME portfolio, although these borrowers havebeen more vigilant in monitoring collection since the second half of last year.We understand that impaired loans trend for the SME portfolio remains benign sofar, with no major upticks seen over the past few months.
- We believe this SME segment is a new growth potential forHLBB, which is positive. SME loans made up about 15% of total loans currently.We are also reassured by the latest impaired loans trend. Maintain BUY with fair value ofRM14.10/share.
Source: AmeSecurities
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