Hong Leong Bank Announces H1FY25 Results

Kuala Lumpur, 26 February 2025 - Hong Leong Bank Berhad (“Bank” or “HLB”), (BM: HLBANK) today announced its results for the six months ended 31 December 2024 (“H1FY25”). 
 

●Operating profit for H1FY25 improved by 10.3% year-on-year (“y-o-y”) to RM1,965 million and profit before tax increased 6.0% y-o-y to RM2,740 million.

●Improved non-interest income contribution that expanded 31.3% y-o-y to RM757 million.

●Gross loans and financing increased 7.7% y-o-y to RM199.4 billion, reflecting consistently strong growth momentum.

●Asset quality metrics remained strong with Gross Impaired Loan (“GIL”) ratio of 0.55%.

Kevin Lam, Group Managing Director and Chief Executive Officer of HLB commented,
“The Bank remains committed to its 3-5 Year Transformative Plan, and are making notable progress in key business growth areas of the plan, such as branch transformation, regional wealth management, SME expansion and Global Markets franchise sales. These building blocks that we have put in place are yielding positive results, delivering a commendable operating profit and profit before tax that expanded 10.3% y-o-y and 6.0% y-o-y for H1FY25.
 

Our profit after tax for H1FY25 was recorded at RM2,238 million, increasing 5.7% y-o-y supported by robust topline growth, solid asset quality and stable contribution from our associates. Correspondingly, this resulted in a commendable return on equity (“ROE”) of 11.9%.
 

Gross loans and financing portfolio expanded ahead of industry at 7.7% y-o-y to RM199.4 billion, attributed to expansion in our mortgage, auto loans, SME and commercial banking segments as well as key overseas markets. We continue to uphold our prudent risk management culture and tight credit underwriting process leading to healthy GIL ratio of 0.55% and sufficient LIC of 139.0%.”

Commendable Underlying Performance

• Total income for H1FY25 carried on its promising growth trajectory from first quarter with 13.0% y-o-y growth to RM3,230 million, driven by expansion in loans/financing portfolio and growing non-interest income contribution. 

• Net interest income for H1FY25 increased by 8.3% y-o-y to RM2,472 million, led by strong loans/financing growth and effective funding cost management. Correspondingly, net interest margin (“NIM”) improved 6bps y-o-y to 1.91%.

• Non-interest income for H1FY25 surged 31.3% y-o-y to RM757 million driven by higher wealth management income and favourable gains from treasury activities and foreign exchange. 

• Operating expenses for H1FY25 were strategically managed at RM1,253 million delivering positive JAWS with an improved CIR of 38.8%, as we continue to invest strategically in areas of technology and people.

Robust Loans/Financing Growth

• Gross loans, advances and financing stepped up its growth momentum, increasing 7.7% y-o-y to RM199.4 billion. This was contributed by expansion in our key segments of mortgage, auto loans, SME and commercial banking as well as key overseas markets.
• Domestic loans/financing increased 7.6% y-o-y, outperforming industry growth rate of 5.6%.

• Residential mortgages increased 5.9% y-o-y to RM97.7 billion, supported by a healthy loans/financing pipeline. Transport vehicle loans/financing continues to deliver double-digit growth of 11.2% y-o-y to RM22.9 billion underpinned by the Bank’s continuous effort and initiatives to enhance dealer coverage and green car financing. 

• Loans to domestic business enterprises grew 7.8% y-o-y to RM65.0 billion. Our support for SMEs saw this loans/financing portfolio grew 11.6% y-o-y to RM38.2 billion, while our community banking initiative within the SME segment saw an encouraging 11.1% y-o-y growth, though our continuous dedication to providing innovative solutions and personalised support tailored to our SME customers’ specific needs.

• Key overseas markets, Singapore and Vietnam continue to record healthy y-o-y loans expansion of 6.5% and 6.9% respectively.

Prudent Funding and Liquidity Positions

• The Bank continues to maintain healthy funding and liquidity positions, with loans to deposits ratio (“LDR”) of 86.6% as at 31 December 2024 and daily average liquidity coverage ratio (“LCR”) of 133% for the quarter, comfortably above regulatory requirements.

• Customer deposits for H1FY25 was up 7.4% y-o-y to RM226.7 billion. CASA maintained solid growth of 7.9% y-o-y to RM71.0 billion resulting in CASA ratio sustained at 31.3%. CASA acquisition remains a key focused area as we continue to step up the targeted efforts in community deposit acquisition and enhance our customer centric cash management solutions.

• The Bank is focused on acquiring and retaining stable sources of funding, as evident by a high individual deposit mix of 50.6%, of which the portfolio grew 6.3% y-o-y growth to RM114.7 billion as of 31 December 2024.

Solid Asset Quality and Capital Management

• Asset quality position of the Bank remained healthy with a GIL ratio of 0.55% whilst LIC ratio is well positioned at 139.0% as at 31 December 2024. Inclusive of the value of securities held on our GIL, the Bank’s LIC ratio is comfortably at 209.0%.  

• Capital position of the Bank remained solid with CET 1, Tier 1 and Total Capital ratios at 13.0%, 14.0% and 15.9% respectively as at 31 December 2024. 
  
  

Dividend

• The Board has declared an interim dividend of 28.0 sen per share for Holders.”
   

Providing Digital Solutions with Strategic Partnerships

• In a move that solidifies HLB’s position as a digital-first financial institution, the Bank has signed a strategic cooperation agreement with WeBank Technology Services, a subsidiary of WeBank, China’s largest digital bank.
• This strategic partnership underscores the Bank’s commitment to collaborating with the best-in-class, with the goal of pushing the boundaries of financial technology and elevating its operational efficiency with cutting-edge AI technology.

• HLB looks to leverage WeBank Technology Services’ expertise in AI to develop automation tools and AI applications, which will be used to extend capabilities across data systems, marketing, and campaign management, ultimately enhancing the Bank’s customer-focused financial offerings by digitalising its sales and service delivery.  

Business Outlook

Kevin Lam commented, “The Malaysian economy remained on a steady growth path as the year 2024 drew to a close and we remained cautiously optimistic over the growth prospects for 2025 to be ahead of the forecast range of 4.5-5.0%. Resilient private consumption coupled with increased realisation of investment projects will be the main growth pillar, mitigating growing uncertainties on external policies and international trade, that is expected to have some repercussions on global growth outlook and financial markets.
 

In our aspirations to become an ASEAN financial services company that is highly digital and innovative, we continue to uphold our core values and prudent culture while diligently executing our 3-5 Year Transformative Plan. We leverage our strengths in technology and AI to deliver innovative banking solutions that effectively cater to customer needs across all touchpoints, embodying our brand promise of “Built Around You” to our customers. 
 

In this dynamic business landscape, our focus extends beyond business as usual to drive growth in our core business, as we consistently enhance our digital capabilities, cultivate strategic partnerships and develop a world-class talent pool. In line with our carbon-neutral ambition, the Bank remains committed in implementing environmental, social and governance (“ESG”) strategies and practices internally and externally to deliver meaningful impact to all of our stakeholders.”