KUALA LUMPUR, Nov 29 (Bernama) -- Hong Leong Financial Group Bhd’s (HLFG) net profit increased to RM681.74 million in the first quarter of its financial year ending June 30, 2023 (Q1 FY2023) from RM640.56 million in Q1 FY2022, driven by higher contribution from the commercial banking division.
Revenue rose to RM1.65 billion from RM1.56 billion, it said in a filing to Bursa Malaysia.
Hong Leong Bank Bhd (HLB) recorded a higher profit before tax (PBT) of RM1.19 billion versus RM1.04 billion in the previous corresponding quarter, mainly due to higher revenue of RM120 million, a higher share of profit from associated companies of RM47 million, and lower allowance for impairment losses on loans, advances and financing of RM11.2 million.
HLA Holdings Sdn Bhd (HLAH) posted a lower PBT of RM67.7 million from RM108.9 million previously due to a lower life fund surplus of RM17.2 million, lower share of profit from an associated company of RM14.5 million, and higher operating expenses of RM9.5 million.
Hong Leong Capital Bhd (HLCB) registered a weaker PBT of RM20.8 million as compared to RM36.9 million in the previous corresponding quarter amid lower contributions across all operating divisions.
In a separate statement, HLFG said HLB’s gross loans and financing grew by 8.8 per cent year-on-year (y-o-y) to RM169.5 billion, led by an expansion in key segments of mortgages, Small and Medium Enterprises (SMEs) and commercial banking, as well as overseas operations.
Its asset quality position remained stable with a Gross Impaired Loans (GIL) ratio of 0.49 per cent and adequate Loan Impairment Coverage (LIC) ratio of 212.2 per cent as at Q1 ended Sept 30, 2022.
Inclusive of the provisions made and the value of securities the bank holds on GIL, the LIC ratio stood at 282.2 per cent.
HLFG said HLAH's performance was affected by higher mark-to-market valuation losses on investments during the period from its subsidiaries as well as a lower share of profits from its associate.
The key insurance operating subsidiary, Hong Leong Assurance Bhd (HLA), saw its net profit after tax decline to RM55.8 million despite higher operating surplus, mainly due to higher mark-to-market valuation losses on investments mainly in fixed income products intended to be held to maturity.
Family Takaful operating subsidiary, Hong Leong MSIG Takaful Bhd (HLMT) showed a strong business growth trajectory, with an increase of 88 per cent y-o-y in gross contribution, while overseas general insurance companies, HL Assurance Pte. Ltd and Hong Leong Insurance (Asia) Limited’s gross premiums both experienced a growth of 40 per cent and 15.4 per cent y-o-y respectively.
Meanwhile, HLCB's net profit slipped to RM16.0 million due to lower income contributions from its investment banking, stockbroking, and fund management business divisions.
Hong Leong Investment Bank Bhd’s (HLIB) financial performance was affected by the significantly lower Bursa Malaysia market activity in Q1 FY2023, with traded value decreasing by 41.2 per cent y-o-y, while the increase in foreign trading activity coupled with lower retail participation in the market during the period had resulted in its reduced total market share.
Fund management business under Hong Leong Asset Management Bhd (HLAM) and its subsidiary, Hong Leong Islamic Asset Management (HLISAM) posted a lower net profit after tax of RM2.8 million, amid reduced management fee income from lower Money Markets funds following redemptions triggered by the removal of the retail money market tax exemption for non-individual unit holders in January 2022.
HLFG president and chief executive officer Tan Kong Khoon said: “Looking forward, Malaysia’s economy is expected to remain resilient on the back of heightened economic activities supported by robust export growth, improved performance in the services sector, and rebound in the manufacturing sector.
‘’However, the recovery momentum continues to face multiple macroeconomic and external headwinds ranging from elevated inflationary pressures, effects of a strong US dollar, and the risk of a global economic recession.’’
Tan added that the group is cautiously optimistic that the Malaysian economy will remain resilient amid an uncertain and volatile global backdrop.
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