Hong Leong Bank Announces Q1FY26 Results
HONG LEONG BANK ANNOUNCES Q1FY26 RESULTS:
COMMENCING THE NEW FINANCIAL YEAR WITH STRONG GROWTH MOMENTUM IN LOANS/FINANCING AND NON-INTEREST INCOME
Kuala Lumpur, 27 November 2025 - Hong Leong Bank Berhad (“Bank” or “HLB”), (BM: HLBANK) today announced its results for the quarter ended 30 September 2025 (“Q1FY26”).
Operating profit before associate contribution for Q1FY26 grew 7.8% year-on-year (“y-o-y”) to RM1,040 million.
Non-interest income improved 16.3% y-o-y to RM411 million, with a higher non-interest income ratio of 24.4%.
Gross loans/financing momentum gained traction, expanded 9.1% y-o-y to RM211.8 billion.
Asset quality metrics remained healthy with gross impaired loan (“GIL”) ratio of 0.57%.
CASA expanded 9.1% y-o-y to RM76.8 billion, which translates to a CASA ratio of 32.5%.
Kevin Lam, Group Managing Director and Chief Executive Officer of HLB commented,
“We commenced the new financial year demonstrating resilience amidst challenges from persistent global uncertainties. I am pleased to announce that the steadfast execution of our 3-5 Year Transformative Plan has yielded an encouraging set of results in the first quarter, driven by continued expansion in loans/financing, robust non-interest income contribution and solid asset quality.
Our operating profit before associate contribution recorded commendable growth of 7.8% y-o-y to RM1,040 million for Q1FY26. This was achieved despite the anticipated net interest margin compression following the 25bps Overnight Policy Rate (“OPR”) cut in July 2025, demonstrating our ability to manage profitability.
The upward trajectory of our core business is underpinned by gross loans and financing growth, which expanded 9.1% y-o-y. This uplift was contributed by expansion in our mortgage, auto loans, SME and commercial banking segments, while upholding solid asset quality with a GIL ratio of 0.57% and prudent liquidity position.”
Commendable Underlying Performance
Total income for Q1FY26 recorded a 5.4% y-o-y growth to RM1,685 million, underpinned by expansion in loans/financing portfolio and sustained non-interest income.
Net interest income increased 2.4% y-o-y to RM1,274 million, as the higher loans/financing base offsets the impact of net interest margin (“NIM”) compression. NIM for Q1FY26 was 1.84%, lower by 8bps y-o-y or 6bps quarter-on-quarter (“q-o-q”), primarily due to timing difference in repricing for loans and deposits following the OPR cut.
Non-interest income accelerated 16.3% y-o-y or 15.6% q-o-q to RM411 million for Q1FY26, with an improved non-interest income ratio of 24.4%. The drivers for the growth were improved wealth management business, increased global markets franchise sales and favourable treasury gains.
Operating expenses were prudently managed at RM607 million for Q1FY26, achieved through strategic cost management and AI realisation. Correspondingly, we successfully delivered positive JAWS with a lower cost-to-income ratio of 36.0% for the quarter.
For Q1FY26, operating profit before associate contribution grew by 7.8% y-o-y to RM1,040 million while profit before tax growth moderated to 0.9% y-o-y, reaching RM1,351 million. This moderation was driven by lower profit contribution from its associated company, Bank of Chengdu Co., Ltd (“BOCD”) following the natural dilution of the Bank’s stake in BOCD with the completion of its convertible bonds conversion, and FX translation impact from a stronger ringgit.
Robust Expansion in Loans/Financing
Gross loans, advances and financing maintained its strong growth trajectory, with 9.1%
y-o-y growth to RM211.8 billion, led by expansion in our key segments of mortgage, auto loans, SME and commercial banking, as well as key overseas markets.Domestic loans/financing growth of 9.0% y-o-y continues to outperform the industry growth rate of 5.5% y-o-y.
Residential mortgages are 6.4% higher y-o-y at RM102.1 billion, supported by a healthy loans/financing pipeline. Transport vehicle loans/financing continues to deliver double digit growth rate of 11.4% y-o-y to RM24.8 billion, benefitting from strategic partnerships with leading automotive brands and electric vehicle manufacturers, complemented by competitive financing packages.
Loans to domestic business enterprises increased 5.7% y-o-y to RM67.9 billion. Our commitment to the SME sector remains steadfast, with loans/financing to SMEs rising 8.7% y-o-y to RM40.4 billion, including a 10.5% y-o-y increase in our community SME banking portfolio. This is underpinned by our dedication to elevating customer experience, leveraging digital transformation and process innovation to deliver an enhanced range of financial solutions.
Loans from overseas operations grew 10.1% y-o-y, spearheaded by 15.1% and 6.2% y-o-y growth in Singapore and Vietnam respectively.
Prudent Funding and Liquidity Positions
Funding and liquidity positions were managed at prudent levels while allowing for sustainable business growth, with loans to deposits ratio (“LDR”) of 88.1% as at 30 September 2025. Both the daily average for the quarter and rolling 12 months average liquidity coverage ratio (“LCR”) stood at 129.9% and 132.8%, comfortably above regulatory requirements.
Customer deposits for Q1FY26 rose 7.7% y-o-y to RM236.3 billion. Accordingly, CASA notably improved by 9.1% y-o-y to RM76.8 billion, which corresponded to a CASA ratio of 32.5%. This performance was fuelled by a dedicated community deposit acquisition strategy and delivery of differentiated cash management solutions for our customers.
The Bank’s individual deposit portfolio demonstrated solid growth of 8.1% y-o-y to RM119.6 billion, bringing individual deposit mix to 50.6%.
Healthy Asset Quality and Capital Positions
Asset quality position of the Bank remained healthy with a GIL ratio of 0.57%.
Loan impairment coverage (“LIC”) ratio was prudently managed at 89.6% as at 30 September 2025. Inclusive of the value of securities held on our GIL, the Bank’s LIC ratio is well-positioned at 159.6%, whilst with regulatory reserve, the coverage ratio is kept at 243.1%.
Capital position of the Bank is healthy with CET 1, Tier 1 and Total Capital ratios at 12.7%, 13.6% and 15.7% respectively as at 30 September 2025.
Strengthening HLB’s Wealth Management Branding
As HLB looks to strengthen its regional position in wealth management, HLB Private Bank has established a clear and highly relevant positioning: addressing the challenge of inter-generational succession planning.
For families who have built significant businesses and enduring wealth, the challenge of succession planning rarely hinges on financial metrics alone. HLB Private Bank is committed to helping founders and future heirs find common ground, opening new pathways for growth and harmony across generations.
To deliver this mandate, HLB Private Bank looks to leverage its strategic alliance with Lombard Odier, drawing on centuries of global experience in preserving, growing, and transferring wealth across generations.
This comprehensive approach has been brought to life in the Bank's new brand film, Generations Ahead, which focuses on HLB’s commitment to facilitating inter-generational wealth transfer. This new HLB Private Bank identity has also been meticulously rolled out across all client touchpoints, including the new HLB Private Bank office located at Guoco Tower in Tanjong Pagar, Singapore, and through intensive training for its client advisors.
Driving Excellence in Islamic Banking
In conjunction with its 20th anniversary, Hong Leong Islamic Bank (“HLISB”) has launched the HLB Meezani Account-i, a new Shariah-compliant investment account that enables customers to grow wealth through ethical investments, and provide opportunities to earn exciting rewards. The launch marks a significant milestone in the HLISB’s commitment to delivering Islamic banking products and solutions that address the needs of today’s generation.
With HLISB channelling 22% of its total financing amount to SMEs in FY2025, HLISB has been named the Best Islamic Bank for SME Banking for a second time at the Global Islamic Finance Awards 2025. HLISB has distinguished itself as a leader in growing SMEs in the Islamic banking sector, offering a comprehensive suite of Shariah-compliant solutions that are designed to support SMEs at every stage of their growth.
In recognition of its leadership and contributions to advancing Islamic retail banking, HLISB has also been named Best Islamic Retail Banking Brand in Malaysia and Best Islamic Retail Bank for Digital Payments in Malaysia at the Islamic Retail Banking Awards 2025.
Business Outlook
Kevin Lam commented, “We remain cautiously optimistic that the Malaysian economy will stay resilient amidst persistent global uncertainties and the potential for lagged impact from tariff rollouts, as a result of prudent pro-growth measures as well as improved governance to ensure growth sustainability. Tariff-related economic fallouts have been more subdued than anticipated so far given Malaysia’s well-diversified economic structure and held-back in tariffs on semiconductor. On the domestic front, sustained private consumption and continued realisation of investment projects will remain the primary growth catalysts, keeping the Malaysian economy on track to achieve its official growth forecast of 4.0% to 4.8% this year.
In line with our aspiration to be the Best Run Bank in Malaysia, we maintain a rigorous focus on executing our 3-5 Year Transformative Plan, ensuring we deliver sustainable, long-term value for all our stakeholders. At the core of this plan is an unwavering focus on delivering innovative, customer-centric solutions perfectly tailored to the banking needs of our customers, thereby reinforcing our brand promise: “Built Around You”.
With our major building blocks of technology transformation, network strategy refresh and regional organisation revamp in motion, we are ready to revitalise our HLB brand, starting with an “inside out” brand engagement campaign to engage HLB employees to "Live The HLB Brand". A strong internal ownership of our refreshed branding is the foundation for us to be confident to launch a series of new enhanced customer value propositions, first-in-market products and solutions, and a refreshed digital banking platform. This will be announced in the coming months across key markets and countries. We are thus looking forward to the beginning of 2026 with energy and excitement.
To navigate the dynamic business environment effectively, the Bank continued to reimagine and transform our branches, strengthen our growth engines, deepen strategic alliances and enhance Artificial Intelligence (“AI”) and digital capabilities. Furthermore, we are embedding environmental, social and governance (“ESG”) principles across our strategies and practices, ensuring we create a positive and sustainable impact for all stakeholders.”