Hey there, savvy investors and curious minds! Today, we’re taking a closer look at the latest financial heartbeat from one of Malaysia’s leading financial institutions, Hong Leong Bank Berhad (HLB). They’ve just announced their results for the nine months ended 31 March 2025 (9MFY25), and there’s plenty to unpack, especially if you’re a Malaysian retail investor keen on understanding the banking sector.
The headline? HLB has not only achieved solid business performance but also hit new milestones with robust expansion in loans/financing and non-interest income. This report paints a picture of a bank navigating global uncertainties with commendable resilience and strategic foresight. Let’s dive into the numbers and what they mean for HLB’s journey ahead.
Core Data Highlights: A Snapshot of HLB’s Strength
HLB’s 9MFY25 results showcase a strong financial footing, marked by significant growth across key indicators. The bank’s strategic focus on expanding its loan portfolio and diversifying income streams is clearly paying off.
Breaking New Ground: Milestones Achieved
HLB has crossed two significant thresholds:
- Total Assets: Over RM300 billion for the first time.
- Gross Loans/Financing: Exceeded RM200 billion for the first time, reaching RM201.2 billion.
These achievements underscore the bank’s expanding scale and reach within the financial landscape.
Financial Performance at a Glance (9MFY25 vs. 9MFY24)
Let’s compare the key financial figures for the nine months ended 31 March 2025 against the same period last year (9MFY24) to understand the growth trajectory. Note that 9MFY24 figures are calculated based on the reported year-on-year growth rates.
9MFY25
Total Income: RM4,778 million
Net Interest Income: RM3,663 million
Non-Interest Income: RM1,115 million
Operating Profit before Allowances: RM2,924 million
Profit Before Tax (PBT): RM4,002 million
Profit After Tax (PAT): RM3,185 million
9MFY24 (Calculated)
Total Income: RM4,293 million
Net Interest Income: RM3,462 million
Non-Interest Income: RM831 million
Operating Profit before Allowances: RM2,583 million
Profit Before Tax (PBT): Not directly comparable due to one-off items.
Profit After Tax (PAT): Not directly comparable due to one-off items.
The growth is evident:
- Total Income saw a promising increase of 11.3% year-on-year (y-o-y) to RM4,778 million, fueled by strong loans/financing growth and improved non-interest income contribution.
- Net Interest Income rose 5.8% y-o-y to RM3,663 million, thanks to robust loans growth and effective funding cost management. The Net Interest Margin (NIM) also improved by 5 basis points (bps) to 1.90%.
- A standout performer was Non-Interest Income, which surged by a remarkable 34.1% y-o-y to RM1,115 million. This was attributed to the encouraging performance in the wealth management business and global markets (GM) franchise sales alongside higher treasury and foreign exchange gains.
- Operating Profit before allowances demonstrated healthy growth of 13.2% y-o-y to RM2,924 million.
- Despite a one-off non-cash loss of RM408 million (primarily from the natural dilution of HLB’s stake in Bank of Chengdu Co., Ltd. following a convertible bonds conversion), the bank’s Profit Before Tax stood at RM4,002 million and Profit After Tax at RM3,185 million. Excluding this dilution loss and a release of management overlay allowance (MOA), normalised profit after tax would have improved 4.0% y-o-y to RM3,289 million, indicating strong underlying performance.
Robust Growth in Loans/Financing
HLB’s loan book continues its impressive expansion, growing 7.2% y-o-y to RM201.2 billion. This growth outpaced the domestic industry’s growth rate of 5.3%, showcasing HLB’s effective market penetration. Key drivers include:
- Residential Mortgages: Expanded 5.8% y-o-y to RM99.1 billion, led by a healthy loans/financing pipeline.
- Transport Vehicle Loans/Financing: Growth remained robust at 10.9% y-o-y to RM23.5 billion, underpinned by the Bank’s strategic initiatives to strengthen dealer coverage.
- Loans to Domestic Business Enterprises: Increased 6.5% y-o-y to RM65.6 billion. Fuelled by dedicated efforts in customer acquisition and cross-selling, loans/financing to SMEs were higher by 6.8% y-o-y to RM38.2 billion.
- Overseas Operations: Loans grew 8.1% y-o-y, on the back of solid growth of 12.6% and
