EON Capital Berhad First Quarter Q108 Results: Twofold Growth in Pre-Tax Profit to RM105.6 million

"A promising start to the new financial year"

For the financial quarter ended 31 March 2008 ('1Q08'), EON Capital Berhad group ('the Group') achieved a pre-tax profit of RM105.6 million, which doubled the RM50.7 million registered in the corresponding period last year ended 31 March 2007 ('1Q07').

Post-tax annualised return on shareholders funds jumped from 4.8% for 1Q07 to 9.7% in 1Q08. Earnings per share for 1Q08 doubled to 11 sen (annualised 44 sen) compared to 5 sen (annualised 20 sen) for 1Q07.

The overall improvement in profitability QoQ was supported by higher net fund based income and lower loan loss allowances and lower impairment loss on securities. Net fund based income expanded by RM29.8 million or 12% on the back of improved margins through judicious management of assets and liabilities. Loan loss allowances made was RM33.2 million or 28% lower whilst impairment loss on securities was lower by RM22.6 million or 98%. However, other operating income registered a drop of RM7.7 million or 10.3% due to lower contribution from the Group's treasury trading and related activities. The Groups's higher revenue generated was also partly offset by a rise in operating expenses of RM23.0 million or 17.0%.

Total gross loans, advances and financing outstanding amounted to RM29 billion as at 31 March 2008 and the Group has maintained its strategy to focus on retail and SME lending. During the first three months of the year, its residential mortgages expanded by RM62.1 million or 1.1% while lending to SME segment increased by RM158.3 million or 2.8%. Hire purchase receivables however contracted by RM98 million or 1.0% as a result of rebalancing the yield composition of our credit portfolio. As hire purchase receivables constituted 33.2% of the total credit portfolio, said contraction thus negated the overall credit portfolio growth in 1Q08.

The loan portfolio as at end March 2008 comprised 60% retail loans, 20% SME loans and 20% corporate and middle market loans.

Asset Quality Remain Stable

Net NPL ratio as at 31 March 2008 was 4.0% as compared to 4.1% as at 31 December 2007. The Group continued to build up its loan loss coverage, which increased to 62.1% from 58.0% as at Dec 07.

Continuous Efforts in Growing Low Cost Deposits

Total deposits from customers grew by 4.1% to RM28.0 billion at the end of 31 March 2008. The Group's efforts in attracting lower cost savings and demand deposits were yielding results with low cost deposits mix (i.e. current and demand deposits to total deposits ratio) improving steadily to 23.4% as at end-Mar'08, up from 20.6% a year ago.

Balance Sheet and Capital Position

The EON Capital Group's total assets remained strong as at 31 March 2008 with RM41.5 billion, an increase of 1.0% compared to RM41.1 billion as at 31 December 2007. Total shareholders' funds of the Group grew by 2.4% to RM3.2 billion, representing a net asset per share of RM4.63 (Dec'07: RM4.52). Meanwhile, the Group's core capital ratio was 8.7% while the risk-weighted capital ratio was 12.2% as at 31 March 2008.

Our Strategy Moving Ahead

The Group has embarked on a business transformation program, "Project Quantum Leap" ("PQL"), to build the foundation for our competitive edge and sustainable growth.

Under PQL, the strategic priorities for 2008 will include:

• Achieving sustainable and profitable growth by building scale in our retail, commercial banking and investment banking businesses.
• Strengthening our risk management capabilities, processes and practices.
• Mobilizing more demand and savings deposits from retail, corporate and institutional clients, through innovative marketing campaigns.