HLB registers net profit of RM1.09bil in 1Q26

PETALING JAYA: Hong Leong Bank Bhd (HLB) has signalled a positive start to its financial year, with first-quarter results for the period ended Sept 30, 2025 (1Q26) reflecting resilience in both lending and non-interest income despite persistent global uncertainties.

“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,” HLB group managing director and chief executive officer Kevin Lam said.

HLB posted a net profit of RM1.09bil for 1Q26, up 0.09% year-on-year (y-o-y), while revenue rose 5.44% y-o-y to RM1.68bil.

Pre-tax profit increased 0.9% y-o-y to RM1.35bil, supported by higher net income of RM87mil and lower operating expenses of RM18.6mil, offset partially by higher allowances for impairment losses on loans and advances of RM30.1mil and a reduced contribution from its associated company, Bank of Chengdu Co Ltd.

Operating profit before associate contribution recorded a commendable growth of 7.8% y-o-y to RM1.04bil.

“This was achieved despite the anticipated net interest margin compression following the 25-basis-point overnight policy rate cut in July 2025, demonstrating our ability to manage profitability,” Lam said.

“The upward trajectory of our core business is underpinned by gross loans and financing growth.

“This uplift was contributed by expansion in our mortgage, auto loans, small and medium enterprise (SME) and commercial banking segments, while upholding solid asset quality with a gross impaired loan (GIL) ratio of 0.57% and prudent liquidity position,” Lam said.

HLB’s gross loans and financing expanded 9.1% y-o-y to RM211.8bil, driven by growth in mortgage, auto loans, SME and commercial banking segments.

Domestic loans rose 9.0% y-o-y, outperforming the industry growth rate of 5.5%, while overseas operations recorded 10.1% y-o-y growth, led by Singapore and Vietnam.

Residential mortgages climbed 6.4% to RM102.1bil and transport vehicle financing surged 11.4% y-o-y to RM24.8bil. Loans to SMEs grew 8.7% y-o-y to RM40.4bil.

Non-interest income strengthened 16.3% y-o-y to RM411mil, contributing to a higher ratio of 24.4%, driven by wealth management, global markets franchise sales, and treasury gains. Net interest income grew 2.4% y-o-y to RM1.27bil, cushioning the impact of a lower net interest margin of 1.84% due to OPR adjustments.

HLB maintained a healthy asset quality, with a GIL ratio of 0.57% and a loan impairment coverage ratio of 89.6%. The bank’s capital position remained robust, with common equity tier one, tier one and total capital ratios at 12.7%, 13.6% and 15.7%, respectively.

Customer deposits rose 7.7% y-o-y to RM236.3bil, with current and savings accounts (Casa) growing 9.1% y-o-y to RM76.8bil, translating into a Casa ratio of 32.5%.

Looking ahead, HLB said it remained cautiously optimistic on Malaysia’s economy, expecting sustained private consumption and ongoing investment projects to drive growth.

“We remain cautiously optimistic that the Malaysian economy will stay resilient amid 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,” Lam said.