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Market Daily Report: Bursa Malaysia Ends Flat On Renewed Global Bond Yields, Geopolitical Concerns

KUALA LUMPUR, Aug 21 (Bernama) -- Bursa Malaysia ended little changed on Friday, as investors remained cautious amid renewed pressure on global bond yields and geopolitical tensions, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.23 points to 1,736.48 compared with Thursday’s close of 1,736.71. The benchmark index opened 0.63 of a point lower at 1,736.08, and fluctuated between 1,733.13 and 1,738.30 throughout the day. On the broader market, losers outpaced gainers 637 to 578, while 571 counters were unchanged, 1,086 untraded and 47 suspended. Turnover decreased to 3.91 billion units valued at RM3.32 billion from 4.28 billion units valued at RM4.01 billion on Thursday.  
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Hong Leong Bank Expects Lower Costs with AI Integration

AI-Driven Cost Efficiency

  • Hong Leong Bank (HLBANK) projects a lower cost-income ratio (CIR) due to AI adoption, expecting CIR to drop below 40%, compared to its previous 41% guidance.
  • For 1HFY2025, CIR stood at 38.8%, exceeding expectations despite heavy IT and digital investments.
  • AI is being expanded beyond collections and telemarketing to other operations, including boosting relationship managers’ productivity.

Strategic AI & Digital Banking Collaboration

  • Hong Leong Bank partners with China’s largest digital bank, WeBank Technology Services, serving 400M retail customers & 5M businesses.
  • The alliance will focus on AI, automation, and sales/service digitization to enhance efficiency and technological capabilities.

Workforce & Regulatory Impacts

  • AI adoption will not affect workforce numbers (~10,000 employees) but aims to improve productivity.
  • The removal of the Rule of 78 interest calculation method is expected to have an immaterial impact on Hong Leong Bank’s financials.

Bank of Chengdu Stake & Market Performance

  • Hong Leong Bank’s stake in Bank of Chengdu (BoCD) remains stable at 17.8% after dilution from minority shareholders converting bonds.
  • Stock surged 2.6% to RM21.42, valuing the bank at RM46.04 billion.

Summary:

  • Hong Leong Bank expects AI to reduce operational costs, lowering CIR below 40%.
  • Strategic alliance with China’s WeBank focuses on AI and digital transformation.
  • AI implementation will not affect workforce size but enhance productivity.
  • Stock price gained 2.6%, with market value reaching RM46.04 billion.
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