Hong Leong Bank records stable earnings of RM1.09bil in 1Q

KUALA LUMPUR: Hong Leong Bank Bhd posted flattish earnings in the first quarter of its financial year, on the back of a narrower net interest margin (NIM) following the recent reduction in the overnight policy rate (OPR).

NIM in 1QFY26 was 1.84%, which was eight basis points lower than in the same quarter in 2024, primarily due to the timing difference in repricing for loans and deposits following the OPR cut.

In its results report, the group said net profit came in at RM1.09bil, which on a par with earnings in the year-ago quarter.

This came on the back of higher quarterly revenue of RM1.68bil against RM1.6bil in the comparative quarter, 

underpinned by a growing loans portfolio and sustained non-interest income.

"Our operating profit before associate contribution recorded commendable growth of 7.8% year-on-year (y-o-y) to RM1.04bil in 1QFY26. 

"This was achieved despite the anticipated NIM compression following the 25bps OPR cut in July 2025, demonstrating our ability to manage profitability," said group managing director and CEO Kevin Lam.

Meanwhile, the group reported a moderation in pre-tax profit growth to 0.9% y-o-y to RM1.35bil, driven by lower profit contribution from associated company Bank of Chengdu Co Ltd. This was owing to 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.

During the quarter, Hong Leong Bank's net interest income increased 2.4% y-o-y to RM1.27bil as the higher loans and financing base offset the impact of the NIM compression.

Non-interest income expanded 16.3% y-o-y to RM411mil, with the growth drivers being an improved wealth management business, increased global markets franchise sales and favourable treasury gains.

Gross loans, advances and financing grew 9.1% y-o-y to RM211.8bil with domestic loans and financing expanding 9% y-o-y.

Customer deposits in 1QFY26 rose 7.7% y-o-y to RM236.3bil while current account savings account (Casa) improved 9.1% y-o-y to RM76.8bil for a Casa ratio of 32.5%.

Meanwhile, holding company Hong Leong Financial Group Bhd (HLFG) announced a net profit of RM841.32mil in the first quarter of its financial year, marginally lower than RM847.67mil in the year-ago quarter.

It said the earnings was supported by core operating profit growth of 5.3% y-o-y and was moderated by lower profit contributions from associated companies.

Quarterly revenue climbed to RM1.94bil from RM1.89bil in the comparative quarter.

Among its divisions, insurer HLA Holdings Sdn Bhd's pre-tax profit declined 8.5% y-o-y due to lower net insurance service results from higher claims and lower contractual

service margin (CSM) recognition.

Investment banking and fund management division Hong Leong Capital Bhd's pre-tax profit was higher by 13% y-o-y, primarily attributable to stronger contributions from investment banking division and higher mark-to-market equity investments gains.

HLFG president and CEO Tan Kong Khoon said the group is elevating its brand presence and distribution strength through strategic expansion.

"This includes the rollout of next-generation branches alongside new Meet@HLB community branches now operating in Eco Majestic, Semenyih, and Kulim Hi-Tech Park, Kedah.

"In tandem, HLFG is expanding our product suite to provide customers with foreign-denominated investments by partnering with Amundi, a leading global asset manager to launch Hong Leong Global Equity Fund," he said in a statement.