9MFY25 Results: Hong Leong Bank Delivers Solid Business Performance

The Bank is confident that the Malaysian economy will remain resilient amidst the ongoing external headwinds

KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 28 May 2025 - Hong Leong Bank Berhad ("Bank" or "HLB"), (BM: HLBANK) today announced its results for the nine months ended 31 March 2025 ("9MFY25").

• New milestones achieved with total asset and gross loans/financing crossing the RM300 billion and RM200 billion mark for the first time respectively.
• Operating profit before allowances for 9MFY25 grew 13.2% y-o-y to RM2,924 million.
• Non-interest income for 9MFY25 improved by 34.1% year-on-year ("y-o-y") to RM1,115 million.
• Upholding solid asset quality metrics as reflected by low Gross Impaired Loan ("GIL") ratio of 0.57%.

Kevin Lam, Group Managing Director and Chief Executive Officer of HLB commented, "We are confident that the Malaysian economy will remain resilient amidst the ongoing external headwinds, whilst at HLB, we focus on the execution of the 3-5 Year Transformative Plan to deliver sustainable results to our stakeholders. With that, we are pleased to announce that our business performance thus far has been commendable underpinned by solid loans/financing growth, strong non-interest income contribution and healthy asset quality. For 9MFY25, we have recorded a healthy profit before associates' contribution of RM3,311 million underpinned by topline expansion, disciplined cost management and release of management overlay allowance ("MOA"). Excluding the release of MOA, our financial performance is still robust with normalised profit before associates' contribution increasing 9.2% y-o-y, demonstrating the positive outcomes of the building blocks that were put in place. The strong growth momentum of gross loans and financing continues with 7.2% y-o-y expansion to RM201.2 billion, achieving a new milestone of crossing RM200 billion. This was contributed by expansion in our mortgage, auto loans, SME and commercial banking segments as well as key overseas markets. In view of the persistent global uncertainties, it is our utmost priority to maintain the solid asset quality with a healthy GIL ratio of 0.57%. In addition, we remain resilient and are well-positioned to continue support our customers in their personal and business endeavours." Commendable Underlying Performance

• Total income for 9MFY25 continued to see promising growth of 11.3% y-o-y to RM4,778 million, driven by expansion in loans/financing portfolio and improved non-interest income contribution.
• Net interest income for 9MFY25 was recorded at RM3,663 million, increasing 5.8% y-o-y, underpinned by strong loans/financing growth and effective funding cost management. Accordingly, net interest margin ("NIM") was up 5bps y-o-y to 1.90%.
• Non-interest income for 9MFY25 maintained the notable improvement of 34.1% y-o-y to RM1,115 million. This was attributed to the encouraging performance in the wealth management business and GM franchise sales alongside the higher treasury and foreign exchange gain.
• Operating expenses for 9MFY25 remained well managed at RM1,854 million with positive JAWS being attained contributed by strategic cost management initiatives. Accordingly, CIR was sustained at 38.8%.
• Profit contribution from associates for 9MFY25 stood at RM1,099 million. During the financial period, there was also a one-off non-cash loss of RM408 million, largely attributed to the natural dilution of HLB's stake in its associated company, Bank of Chengdu Co., Ltd ("BOCD") following the completion of its convertible bonds conversion into new ordinary shares, which resulted in an increase in BOCD's total issued share capital.
• Correspondingly, profit before tax and profit after tax stood at RM4,002 million and RM3,185 million respectively. Excluding the release of MOA and dilution loss, profit after tax would have improved 4.0% y-o-y to RM3,289 million.

Robust Growth in Loans/Financing

• Gross loans, advances and financing grew 7.2% y-o-y to RM201.2 billion, driven by expansion in our key segments of mortgage, auto loans, SME and commercial banking as well as key overseas markets.
• Domestic loans/financing increased 7.1% y-o-y, ahead of the industry growth rate of 5.3%.
• Residential mortgages expanded 5.8% y-o-y to RM99.1 billion, led by a healthy loans/financing pipeline. Transport vehicle loans/financing growth remained robust at 10.9% y-o-y to RM23.5 billion, underpinned by the Bank's strategic initiatives to strengthen dealer coverage.
• Loans to domestic business enterprises increased 6.5% y-o-y to RM65.6 billion. Fuelled by our dedicated efforts in customer acquisition and cross-selling, loans/financing to SMEs were higher by 6.8% y-o-y to RM38.2 billion, while our community banking initiative within the SME segment increased 10.1% y-o-y. In this uncertain environment, we remain proactive in engaging our clients and provide the necessary personalised support.
• Loans from overseas operations grew 8.1% y-o-y, on the back of solid growth of 12.6% and 11.1% in Singapore and Vietnam respectively.

Solid Funding and Liquidity Positions

• The Bank remains prudent in its funding and liquidity positions to strengthen resilience and stability, with loans to deposits ratio ("LDR") of 87.9% as at 31 March 2025. Both the daily average for the quarter and rolling 12 months average liquidity coverage ratio ("LCR") stood at 133%, sufficiently above regulatory requirements.
• Customer deposits for 9MFY25 rose 5.9% y-o-y to RM225.0 billion with CASA expanding 5.0% y-o-y to RM68.3 billion. The Bank's CASA ratio stood at 30.4% supported by the Banks' strategic focus in community deposit acquisition and customer centric cash management solutions.
• The Bank's individual deposit portfolio expanded 7.5% y-o-y to RM118.2 billion as of 31 March 2025 with a consistently solid individual deposit mix of 52.5%, reflecting the Bank's effort to maintain a stable funding base.

Healthy Asset Quality and Capital Positions

• The Bank continues to place significant emphasis on maintaining solid asset quality position with a low GIL ratio of 0.57%.
• LIC ratio stood at 95.0% as at 31 March 2025, as we maintain sufficient coverage through securities and regulatory reserves. Inclusive of the value of securities held on our GIL, the Bank's LIC ratio is well positioned at 165.0%, whilst with regulatory reserve, the coverage ratio is higher at 250.0%.
• Capital position of the Bank remained healthy with CET 1, Tier 1 and Total Capital ratios at 12.8%, 13.7% and 15.7%respectively as at 31 March 2025.

HLB's Landmark Strategic Alliance with Lombard Odier

• In a move that underscores a shared vision for responsible and forward-thinking wealth management for generations ahead, HLB is entering into a Strategic Alliance with Lombard Odier, a leading global wealth and asset manager with over 220 years of heritage.
• Under this strong alliance, HLB Regional Wealth Management will offer clients a sophisticated and personalised experience, combining Lombard Odier's global perspectives from its Chief Investment Officer with the Bank's local market insights. This will include enhancing the bespoke wealth management solutions offered by HLB Private Bank, providing a comprehensive understanding of investment opportunities and tailored strategies for generational growth.
• Beyond investment expertise, HLB clients are able to access comprehensive wealth architecture and bespoke advisory services focused on their individual goals, ensuring tailored solutions for wealth preservation and transfer, including succession planning and sustainable investments.

Redefining Branch Banking with New Community Branch Concept

• In line with its vision of being a "Digital Bank Plus Much More" and creating a powerful synergy of digital convenience and genuine human connection, HLB has launched its innovative Meet @ HLB branch concept in Eco Majestic, Semenyih.
• This initiative is a vital part of the Bank's broader branch transformation strategy, where it looks to strategically evolve its physical network to better serve its diverse customer base.
• Meet @ HLB provides customers with convenient access to ATMs, retail banking, and cash deposit machines in areas which are further away from HLB's branches. The branch is open from 12:30 pm to 7:00 pm, including weekends, which allows customers to conveniently integrate their banking needs around their busy schedules.

Delivering Memorable Experiences and Supporting Creative Industries

• HLB is delighted to be the presenting sponsor for G-Dragon's highly-anticipated Übermensch world tour in Kuala Lumpur, exclusively organised by Tencent Music Entertainment ("TME"), which will take place on 19 & 20 July 2025 at Axiata Arena.
• This is aligned with the Bank's commitment to offer its valued cardholders with unparalleled experiences and rewards, providing HLB cardholders with early access privileged and VIP opportunities.
• On a separate note, HLB has also announced a three-year strategic partnership with the Malaysian International Film Festival (MIFFest), underscoring its commitment to supporting and developing the creative industries, while fostering unity and understanding through a diverse range of films and narratives.
• With MIFFest being a pivotal platform for showcasing cinematic excellence and fostering cultural exchange, HLB aspires to not only connect with a diverse tapestry of audiences, but also serve as a catalyst for the continued growth of creative industries.

Best in Malaysia for Sustainable Energy Financing

• As HLB strengthens its focus on sustainability and supporting Malaysia's transition towards a robust circular economy, the Bank has received the award for Best Domestic and Islamic Bank for Sustainable Energy Financing 2024 at the National Energy Awards, a third win for HLB at these awards.
• This comes as HLB recently launched its Sustainable Finance Framework (SFF), which aims to mobilise RM20 billion in support of projects in renewable energy, energy efficiency, green building, affordable housing, clean transportation, and waste management over the next five years.
• HLB has made significant progress in its sustainable financing portfolio. As of December 2024, the Bank has recorded RM15.4 billion in outstanding green building and affordable property financing, RM3.6 billion in approved renewable energy financing, and RM1.4 billion in outstanding green car loans.
• The Bank has also achieved a 23% decrease in operational carbon emissions since 2019, as it works towards achieving total net zero greenhouse gas emissions by 2050.

Driving Excellence in Islamic Banking

• Hong Leong Islamic Bank ("HLISB") has been named Best Islamic Retail Bank in Malaysia at the Islamic Finance News ("IFN") Best Banks Poll 2024, solidifying its position as Malaysia's premier retail bank for Islamic and Shariah-compliant banking.
• In FY2024, HLISB recorded a 13% y-o-y increase in profit (before zakat and taxes), boosted by a 17% rise in individual deposits. HLISB also recorded an 11% y-o-y growth in its retail financing portfolio, leading to a 10% increase in retail deposits.
• HLISB's recent growth in retail banking can be attributed largely to its seamless and comprehensive digital banking experience, which includes its fully-digital account onboarding experience and an end-to-end digital banking ecosystem.
• The Bank has also launched its HLB Wallet-i e-wallet, which allows customers to save, spend, and manage their finances across different currencies and geographies, including allowing customers to withdraw money across different currencies using the same debit card.

Business Outlook Kevin Lam commented, "We maintain a cautiously balanced outlook for the Malaysian economy this year, driven by sustained private consumption amid a still healthy labour market, and anticipation for further realisation of investment projects. Nonetheless, we acknowledge the presence of global uncertainties, particularly those stemming from evolving tariffs policies and negotiations, as well as policy responses from major central banks that could potentially influence the final growth outcome, even as resilient domestic demand is expected to provide a buffer against external headwinds. In our journey to be the best-run bank in Malaysia, we have found our rhythm and remain focused on executing the strategic initiatives of our 3-5 Year Transformative Plan. This journey of continuous improvement is fundamentally about our unwavering commitment to support our customers for the long term. By leveraging our strengths in technology and AI, we will create innovative banking solutions that resonate with our customer across all touchpoints, solidifying our brand promise of "Built Around You". To drive growth in our core business and build a strong ASEAN franchise, we will continue to enhance our digital capabilities, leverage strategic alliance with best-in-class global partners, as well as empower our people to reach their greatest potential and excel in this dynamic business environment. Driven by our carbon-neutral ambition, the Bank will proactively integrate environmental, social, and governance ("ESG") strategies and practices into our own business operations, while actively collaborating with stakeholders to achieve significant, positive impact." Hashtag: #HongLeongBank #HLB https://www.hlb.com.my

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