KUALA LUMPUR (May 28): Hong Leong Bank Bhd (KL:HLBANK) posted a 9.4% drop in net profit for the third quarter ended March 31, 2025, mainly due to dilution losses from two China-based firms, which reduced its future profit share, and lower earnings from associate companies.
The bank's net profit stood at RM946.69 million, compared with RM1.04 billion in the same quarter last year. The decline was mainly attributed to dilution losses totalling RM407.6 million and a RM60 million decline in profit from its associated companies.
In a filing with the bourse, the group said the biggest hit came from a RM393 million non-cash loss following the dilution of its equity interest in Bank of Chengdu Co Ltd from 19.8% to 17.8%, after other partners converted their convertible bonds into new shares. In a separate move, Hong Leong Bank divested a 10% stake in its associate Sichuan Jincheng Consumer Finance Co Ltd, reducing its holding from 12% to 2%, resulting in a further RM15 million dilution loss.
Despite the dip in profit, the bank’s revenue rose 7.8% year-on-year to RM1.55 billion from RM1.44 billion, driven by strong loan growth both locally and abroad.
Gross loans, advances and financing rose 7.2% year-on-year to RM201.2 billion. Domestic loans grew 7.1%, outpacing the industry average of 5.3%. Key segments included:
- Residential mortgages, up 5.8% to RM99.1 billion
- Transport vehicle loans, up 10.9% to RM23.5 billion
- Loans to domestic businesses, up 6.5% to RM65.6 billion
- SME loans, up 6.8% to RM38.2 billion
Meanwhile, overseas operations saw an 8.1% loan growth, driven by strong performances in Singapore (+12.6%) and Vietnam (+11.1%).
No dividend was declared for the quarter.
For the first nine months of FY2025 (9MFY2025), the bank reported a modest 0.7% increase in net profit to RM3.18 billion from RM3.16 billion a year ago. Revenue for the period rose 11.3% to RM4.77 billion.
Net interest income grew 5.8% to RM3.66 billion, supported by healthy loan growth and efficient funding cost management. Net interest margin improved by five basis points to 1.90%.
Non-interest income increased 34.1% to RM1.12 billion, bolstered by higher wealth management income, and gains from treasury and foreign exchange activities.
The bank’s asset quality remained stable with a gross impaired loan ratio of 0.57% and a loan impairment coverage ratio of 95%. Its cost-to-income ratio stood at 38.8%, unchanged from the previous quarter.
Group managing director and chief executive officer Kevin Lam said the bank is focused on executing its three- to five-year transformation plan aimed at strengthening its Asean footprint. This includes advancing digital banking, leveraging AI, and deepening partnerships with global players.
“We remain committed to developing innovative banking solutions that resonate with customers while supporting our sustainability ambitions,” Lam said, adding that the bank aims to integrate environmental, social and governance practices across its operations.
Hong Leong Bank shares rose two sen to RM19.90 at the midday break on Wednesday, giving the group a market capitalisation of RM43.14 billion. Year-to-date, the stock has slipped marginally by 0.3%.