Hong Leong Financial Group Bhd reported a modest improvement in 2QFY2026 earnings, supported by loan growth and cost discipline, despite margin compression and higher impairment charges. Net profit for the quarter rose 7% year-on-year to RM899.3 million. The group declared an interim dividend of 22 sen per share , up 10% from last year. For 1HFY2026, net profit increased 3.2% to RM1.74 billion. Key Financial Metrics 2QFY2026: Net profit: RM899.3 million (+7%) Revenue: RM1.92 billion (+3.2%) Interim dividend: 22 sen 1HFY2026: Net profit: RM1.74 billion (+3.2%) Revenue: RM3.86 billion Operational highlights: Gross loans growth: +8.2% YoY to RM215.7 billion Domestic loan growth: +8.3% (vs industry 4.9%) Net interest margin: 1.83% CASA growth: +12.1% to RM79.6 billion Cost-to-income ratio: improved to 35.9% Gross impaired loans ratio: 0.59% CET1 ratio: 12.6% Annualised ROE: 10.7% Book value per share: RM29.16 Money Master Take HLFG’s quarter reflects operational stability rather...
Hong Leong Financial Group Bhd reported a modest improvement in 2QFY2026 earnings, supported by loan growth and cost discipline, despite margin compression and higher impairment charges.
Net profit for the quarter rose 7% year-on-year to RM899.3 million. The group declared an interim dividend of 22 sen per share, up 10% from last year.
For 1HFY2026, net profit increased 3.2% to RM1.74 billion.
Key Financial Metrics
2QFY2026:
Net profit: RM899.3 million (+7%)
Revenue: RM1.92 billion (+3.2%)
Interim dividend: 22 sen
1HFY2026:
Net profit: RM1.74 billion (+3.2%)
Revenue: RM3.86 billion
Operational highlights:
Gross loans growth: +8.2% YoY to RM215.7 billion
Domestic loan growth: +8.3% (vs industry 4.9%)
Net interest margin: 1.83%
CASA growth: +12.1% to RM79.6 billion
Cost-to-income ratio: improved to 35.9%
Gross impaired loans ratio: 0.59%
CET1 ratio: 12.6%
Annualised ROE: 10.7%
Book value per share: RM29.16
Money Master Take
HLFG’s quarter reflects operational stability rather than acceleration.
1. Loan Growth Offsetting Margin Compression
The 25-basis-point OPR cut compressed NIM to 1.83%.
However, strong loan expansion — particularly in mortgages, auto loans, SME and overseas markets — lifted net interest income by 2.6%.
This shows volume is compensating for pricing pressure.
Sustainability depends on whether domestic demand momentum continues.
2. Cost Discipline Is a Competitive Advantage
Cost-to-income improved to 35.9%, one of the more efficient levels among Malaysian banking groups.
Automation and AI adoption are beginning to show tangible operating leverage benefits.
That efficiency provides buffer against future margin pressure.
3. Asset Quality Remains Strong
Gross impaired loans ratio at 0.59% remains healthy.
Loan impairment coverage:
83.7% headline
239.8% including regulatory reserves
Credit risk profile appears contained for now.
4. Divisional Performance Mixed
Commercial banking:
Operating profit before associates +5.6%
PBT growth moderated due to stake dilution in Bank of Chengdu and FX impact
Insurance:
Pre-tax profit +10.7%
Strong equity investment income offset higher claims
Investment banking:
Earnings up 33%
Boosted by stronger deal activity and mark-to-market gains
Earnings mix remains diversified, but not aggressively growing.
Investor Positioning View
Short term:
Dividend growth supports yield case
Asset quality stable
Earnings growth modest
Medium term:
ROE at 10.7% remains below aspirational 12–13% level for re-rating
NIM pressure persists in a softer rate environment
HLFG trades as a steady compounder, not a high-beta banking play.
Bottom Line
Profit rose 7% in 2Q.
Dividend increased to 22 sen.
Loan growth outpaced industry.
Margins compressed but offset by volume and cost control.
Asset quality remains strong.
The story here is disciplined execution and balance sheet resilience rather than breakout growth.
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