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...
Shares of MBSB Bhd fell to a one-month low after the group reported FY2025 results that missed both house and consensus estimates.
The stock dropped as much as 8% to 70 sen, erasing gains built over the past month. Market capitalisation stands at approximately RM5.8 billion.
What Went Wrong
According to BIMB Securities:
FY2025 net profit fell 31% YoY to RM280 million
Results met only 69% of forecasts
Fund-based income declined 18%
Credit cost rose to 55 bps (from 37 bps)
Gross impaired loans ratio increased to 6.3%
The earnings drag came from weaker operating income and higher impairment charges.
While non-fund income surged nearly 76%, supported by government scheme funds and investment gains, it was insufficient to offset pressure from financing income and credit provisions.
Cost-to-income ratio also rose to 57.9%.
Money Master Take
This is less about one weak quarter and more about asset quality direction.
1. Credit Quality Deterioration Is the Core Issue
The rise in:
Gross impaired loans to 6.3%
Credit cost to 55 bps
Lower financing loss coverage (39.7%)
suggests pressure in household and selected business segments.
Even if fully collateralised and Ihsan-i financing are excluded (which lifts coverage to 116.5%), headline asset quality metrics are moving in the wrong direction.
Banks get repriced quickly when credit costs turn.
2. Rate Cuts Are Hurting Funding Income
The 25-basis-point OPR cut, delayed disbursements, and redemptions weighed on fund-based income.
That highlights MBSB’s sensitivity to rate movements and financing momentum.
The recovery narrative now depends on:
Stronger corporate loan disbursements
Improved CASA mix
Funding cost optimisation
Execution risk remains.
3. Capital Position Is Strong — But Returns Are the Question
Common equity Tier 1 ratio stands near 19%, which provides:
Strong loss-absorption buffer
Dividend sustainability potential (up to 90% payout suggested)
However, strong capital without improving return on equity does not automatically re-rate the stock.
BIMB Securities maintained a buy call with a fair value of 81 sen, but also cut FY2026 and FY2027 earnings forecasts.
Consensus target price: 78 sen
Current price: ~71 sen
Upside exists, but earnings visibility is weaker.
4. Investor Positioning View
Short term:
Earnings miss resets expectations
Asset quality concerns cap multiple expansion
Medium term:
Recovery depends on stabilising credit costs
Loan growth and margin trajectory will drive sentiment
This is not a growth story — it is a balance sheet management story.
Bottom Line
Profit fell 31% and missed expectations.
Asset quality metrics deteriorated.
Capital strength provides buffer, not growth.
Forecast downgrades suggest slower recovery path.
For investors, the key variable is whether credit cost peaks here — or continues climbing.
Comments
Post a Comment