Core Data Highlights: A Snapshot of Performance

Let’s break down the key financial figures from HLFG’s latest report, comparing the most recent quarter with the same period last year, and then looking at the nine-month cumulative performance.

Quarterly Performance: A Temporary Dip

For the third quarter ended 31 March 2025, HLFG Group’s performance saw a noticeable decrease compared to the same quarter last year. This was primarily attributed to lower contributions across all operating divisions and a significant one-off dilution loss.

The group’s profit before taxation decreased by RM176.8 million, or 11.4%. Similarly, net profit attributable to owners of the parent saw a 12.7% decline, leading to a 12.6% drop in earnings per share. This quarterly reduction was largely influenced by a significant dilution loss of RM407.6 million from associated companies, primarily stemming from the conversion of convertible bonds in Bank of Chengdu Co.,Ltd (BOCD) and the divestment of a stake in Sichuan Jincheng Consumer Finance Limited Company (JCCFC).

Nine-Month Performance: Steady Growth

Despite the quarterly headwind, HLFG’s cumulative performance for the nine months ended 31 March 2025 tells a story of stability and slight growth.

The group posted a 1.3% increase in profit before taxation and a 0.4% rise in net profit attributable to owners of the parent. This positive momentum over the nine-month period was primarily driven by higher contributions from the banking divisions and a significant write-back of impairment losses, which helped offset the impact of the aforementioned dilution losses and higher operating expenses.

Segmental Performance: A Closer Look

HLFG’s diversified structure means performance varies across its key business units:

• Commercial Banking (Hong Leong Bank Berhad – HLB): Profit before taxation for HLB decreased by 0.5% for the quarter. While impacted by the RM407.6 million dilution loss from associated companies and higher operating expenses, this was largely mitigated by a substantial write-back of impairment losses (RM372.7 million) and increased revenue, particularly from the Islamic banking division and non-interest income.
• Investment Banking and Asset Management (Hong Leong Capital Berhad – HLCB): This segment saw a 43.4% decline in quarterly profit before taxation, mainly due to lower contributions from its investment banking, stockbroking, and investment holding divisions.
• Insurance (HLA Holdings Sdn Bhd – HLAH): The insurance arm experienced a significant 64.1% drop in quarterly profit before taxation. This was primarily due to lower net investment income and a reduced share of profit from associated companies, partially offset by higher insurance service income.

Financial Health: A Strong Foundation

Beyond profitability, HLFG’s balance sheet remains robust, indicating a strong financial foundation:

• Total Assets: Increased by 1.2% to RM340.18 billion as at 31 March 2025 (from RM336.21 billion as at 30 June 2024).
• Deposits from Customers: Grew by 1.8% to RM224.11 billion, demonstrating a stable and growing funding base.
• Loans, Advances and Financing (Gross): Saw a healthy increase of 3.2% to RM201.55 billion, reflecting continued business expansion.
• Net Assets Per Share: Improved by 4.7% to RM27.77, indicating enhanced shareholder value.
• Capital Adequacy Ratios: While showing a slight decrease compared to 30 June 2024, the group’s capital ratios remain strong. The Common Equity Tier 1 (CET 1) capital ratio stood at 11.113%, Tier 1 capital ratio at 12.107%, and Total capital ratio at 13.987% (before deducting proposed dividends), all well above regulatory minimums.

Risk and Prospect Analysis: Navigating the Future

HLFG acknowledges the challenging global and domestic economic landscape. The global outlook remains uncertain, with evolving trade policies, escalating tensions, and heightened market volatility potentially leading to inflationary and recessionary pressures. For Malaysia, while Bank Negara Malaysia projects a GDP growth of 4.5% to 5.5%, risks persist from a potential pullback in global trade, which could temper investment and external demand.

However, Malaysia’s diversified trade and resilient macroeconomic fundamentals, coupled with ongoing structural reforms, are expected to mitigate some of these impacts. The current Overnight Policy Rate (OPR) of 3.0% may also be subject to adjustment if economic weakness becomes more apparent due to trade policy shifts.

In response to these external headwinds, HLFG is committed to a cautious yet proactive strategy. They will continue to vigilantly manage key risks related to their capital and liquidity positions. A strong emphasis will be placed on cost discipline and prudent asset quality management. Furthermore, the group plans to pursue strategic priorities by leveraging its integrated financial ecosystem to foster cross-selling, broaden its product range, and deliver customer-centric solutions, aiming to meet the diverse financial services needs of its customers.