Navigating the Currents: A Deep Dive into Hong Leong Financial Group’s 9M FY25 Performance
Ever wondered how a financial giant like Hong Leong Financial Group Berhad (HLFG) steers its ship through a dynamic economic landscape? Today, we’re unpeeling their latest 9M FY25 financial report, which offers a fascinating glimpse into their resilience and strategic maneuvers.
HLFG, a leading financial services provider in Malaysia, has just released its results for the nine-month period ending March 31, 2025. The headline? A stable net profit attributable to shareholders (PATAMI) at RM2.40 billion, demonstrating a commendable ability to hold steady amidst various market pressures. While the reported PATAMI remained flat, a closer look at the adjusted figures reveals a positive underlying trend, showcasing the Group’s strategic agility.
Core Data Highlights: A Closer Look at the Numbers
HLFG’s performance in the first nine months of FY25 paints a picture of a Group with diverse strengths. Let’s break down the key figures:
Overall Group Performance: Steady Growth Beneath the Surface
While the reported Net Profit Attributable to Shareholders (PATAMI) for 9M FY25 was stable at RM2.40 billion, it’s crucial to understand the nuances. The Group’s commercial banking division saw improved results, which helped offset lower income from life insurance and investment banking. It’s also worth noting that the reported PATAMI included certain one-off items from its commercial bank, such as a RM399 million release of management overlay allowance (MOA) and a RM408 million non-cash dilution loss from associated companies.
When these one-off items are excluded, HLFG’s adjusted PATAMI tells a different story of growth:
Adjusted PATAMI (9M FY25)
RM2.47 billion
Adjusted PATAMI (9M FY24)
RM2.39 billion
This represents a healthy 3.3% year-on-year increase, reflecting the underlying strength of the Group’s operations. Furthermore, the Group’s Return on Average Equity (ROE) remains commendable at 10.4% on an annualised basis, and its book value per share has grown significantly:
Book Value Per Share (31 March 2025)
RM27.8
Book Value Per Share (A year ago)
RM25.8
Overall, the Group saw an impressive 8.6% year-on-year increase in topline, driven by above-industry loan growth and a successful strategy to boost fee income, leading to a 14.2% year-on-year growth in non-interest income (NoII).
Business Unit Performance: A Mixed Bag of Strengths and Challenges
HLFG’s diversified structure means that different segments perform differently, contributing to the overall Group’s resilience.
Commercial Banking (Hong Leong Bank – HLB)
Hong Leong Bank continued to be a strong pillar for the Group, with its profit before tax (PBT) showing solid growth:
HLB PBT (9M FY25)
RM4,002 million
HLB PBT (9M FY24)
RM3,852 million
This 3.9% year-on-year increase was primarily driven by topline expansion, benign net credit costs, and prudent cost management. HLB’s gross loans, advances, and financing maintained strong momentum, increasing by 7.2% year-on-year to RM201.2 billion, outpacing the domestic industry growth rate. Net interest income grew by 5.8% year-on-year to RM3,663 million, supported by effective funding cost management, which also led to a 5 basis points improvement in net interest margin (NIM) to 1.90%. Non-interest income surged by 34.1% year-on-year to RM1,115 million, thanks to higher wealth management income and treasury gains. The Bank also maintained a healthy asset quality with a gross impaired loans (GIL) ratio of 0.57%.
Insurance (HLA Holdings – HLAH)
The insurance division faced headwinds, with its PBT declining:
HLAH PBT (9M FY25)
RM489 million
HLAH PBT (9M FY24)
RM565 million
The 13.5% year-on-year decline was mainly due to reduced net investment income and mark-to-market gains, which saw a significant 29% year-on-year drop, alongside a lower share of profits from its associate. This was largely influenced by weaker Malaysian equities performance. However, this was partially mitigated by an improvement in net insurance service results, which increased by 13.4% year-on-year to RM152.2 million, driven by higher expected insurance claims outpacing actual claims and higher contract service margins (CSM) release. Gross premiums for life insurance and family takaful grew by 4.1% year-on-year, led by strong banca new business.
Investment Banking and Asset Management (Hong Leong Capital – HLCB)
The investment banking and asset management arm also experienced a dip in PBT:
HLCB PBT (9M FY25)
RM57 million
HLCB PBT (9M FY24)
RM74.6 million
The 23.6% year-on-year decline was primarily attributable to lower mark-to-market gains on equity investments. While stockbroking PBT declined due to ongoing investments and increased foreign institutional flows, the investment banking division delivered an improved PBT of 9.8% year-on-year, thanks to increased deal flows in equity markets and better Treasury & Markets performance. The asset management business saw its average Assets Under Management (AUM) improve by 4% year-on-year to RM11.6 billion, with its PBT improving by 19.5% to RM8.7 million from prudent cost management initiatives.
Risks and Prospects: Navigating the Future
Hong Leong Financial Group acknowledges the challenging operating environment, stemming from global economic uncertainties, trade disruptions, and geopolitical tensions. These factors have particularly impacted investment income within its insurance and investment banking divisions.
However, the Group is not standing still. It is strategically growing its business through innovation and collaborations. Hong Leong Bank has partnered with Lombard Odier, a renowned Swiss private bank, to enhance its private banking services with advanced wealth management solutions. Furthermore, its life insurance arm launched “Future-Secured,” an innovative life protection product offering medical drawdown features – a first in the market.
HLFG is also leveraging its integrated financial ecosystem, using its strong sales distribution network and competitive product suite to create valuable cross-selling opportunities, which are fueling non-interest income growth. The Group is optimistic about its asset management arm’s upcoming distribution of foreign-denominated funds through this ecosystem, following encouraging results from bancassurance integrated sales.
On the sustainability front, HLFG continues to make significant strides in its Environmental, Social, and Governance (ESG) journey. Its commercial bank has achieved a 23% decrease in operational carbon emissions since 2019, working towards net-zero greenhouse gas emissions by 2050. The life insurer, Hong Leong Assurance, became Malaysia’s first domestic life insurer signatory to the Partnership for Carbon Accounting Financials (PCAF), underscoring the Group’s commitment to supporting Malaysia’s net-zero ambitions. The investment banking and asset management division has also completed four ESG/sustainability-related issuances amounting to RM913 million in 9M FY25, highlighting their commitment to sustainable finance.
Summary and
Hong Leong Financial Group’s 9M FY25 results reflect a resilient financial institution that, despite facing a challenging global economic backdrop, has maintained a stable overall performance, particularly when adjusted for one-off items. The Group’s commercial banking segment continues to be a robust performer, driving topline growth and maintaining healthy asset quality. While the insurance and investment banking divisions faced headwinds from market volatility affecting investment income, the Group’s strategic focus on innovation, synergistic cross-selling within its integrated ecosystem, and a strong commitment to ESG principles positions it for long-term value creation.
The proactive measures in expanding wealth management solutions, introducing innovative insurance products, and strengthening its asset management capabilities are crucial for diversifying income streams and mitigating market-specific risks. The emphasis on sustainability is not just about compliance but also about aligning with global trends and investor expectations, which can open new opportunities.
It’s important for investors to consider the Group’s diversified business model, its ability to generate non-interest income, and its prudent financial management. The mixed performance across segments underscores the importance of a holistic view when evaluating the Group’s prospects.
Disclaimer: This blog post is for informational purposes only and does not constitute financial advice or . Readers should conduct their own due diligence or consult with a qualified financial advisor before making any investment decisions.
Key areas to watch for future performance include:
- The continued growth trajectory of the commercial banking division, particularly in loans and non-interest income.
- The recovery of investment income within the insurance and investment banking segments amidst fluctuating market conditions.
- The successful execution and impact of new strategic partnerships and product innovations, such as the HLB-Lombard Odier collaboration and the “Future-Secured” product.
- The tangible benefits derived from the integrated financial ecosystem, particularly in driving cross-selling opportunities and foreign-denominated fund distribution.
- The progress and impact of the Group’s comprehensive ESG initiatives on its operational efficiency and market positioning.
Looking Ahead: What Does This Mean for Investors?
HLFG’s 9M FY25 report showcases a financial group that is resilient, adaptable, and forward-thinking. While global uncertainties persist, the Group’s strategic initiatives in innovation, ecosystem leverage, and sustainability are positive indicators for its future trajectory. The ability to grow its core banking business while simultaneously addressing challenges in other segments demonstrates a mature and well-managed organization.
What are your thoughts on HLFG’s strategy to balance traditional banking strength with new growth areas like wealth management and sustainable finance? Do you think the company can maintain this growth momentum in the next few years? Share your views in the comment section below!
For more insights into the Malaysian financial market, explore our other analyses on recent quarterly reports.
