Hong Leong Capital (HLCB) announced the first quarter results for the period ended 30 September 2022 (1QFY23).
- HLCB recorded a net profit after tax of RM16.0 million, a decrease of 44.4% year-on-year (y-o-y). The lower profit was mainly a result of a corresponding lower profit contribution from its key operating subsidiary; Hong Leong Investment Bank (HLIB) in the current financial period.
- Book value per share decreased from RM4.01 as at 30 June 2022 to RM3.88 as at 30 September 2022 after declaration of a final single-tier dividend of 19 sen for financial year ended 30 June 2022.
“The global economy continues to be weighed down by rising cost pressure, tighter global financial conditions and strict containment measures in China. These factors more than offset the support from positive labour market conditions and the full reopening of most economies and international borders,” Hong Leong Capital Berhad’s Chairman, Tan Kong Khoon said.
“Inflationary pressures were more persistent than expected due to strong demand, tight labour markets and elevated commodity prices, despite improvements in global supply chain conditions. Consequently, many central banks are expected to continue raising interest rates to manage inflationary pressures,” he added.
“Notwithstanding the bouts of heightened volatility in the global financial and foreign exchange markets, these developments are not expected to derail Malaysia’s growth.”
“Downside risks to the domestic economy continue to stem from a weaker-than-expected global growth, higher risk aversion in the global financial markets amid more aggressive monetary policy tightening in major economies, further escalation of geopolitical conflicts and worsening supply chain disruptions.”
“We remain committed to deliver sustainability and long-term value of our business by continuously adjusting our business strategies to adapt to market conditions and maintain our course on prudent cost management,” he concluded.
HLIB’s net profit after tax decreased 35.9% y-o-y to RM12.2 million, arising from lower profit contribution from the stockbroking division and investment banking division. HLIB contributed 76.1% of HLCB’s profit after tax.
- Whilst its stockbroking division’s financial performance was affected by the significantly lower Bursa market activity in 1QFY23, with Bursa traded value decreasing by 41.2% y-o-y driven by worries of rate hikes, surging inflation and rising risks of recession in the US & Europe. The increase in foreign participation coupled with decreasing retail participation during the financial period has also led to HLIB recording a lower market share during this period.
- HLCB’s Shariah trading platform was launched and made available to our retail clients in July 2022. A fully digital account opening experience is in the pipeline and the expansion of footprint will enable us to serve our customers better.
- Capital position remained robust with Common Equity Tier 1, Tier 1 and Total Capital Ratios at 35.8%, 35.8% and 46.8% respectively as at 30 September 2022.
The fund management business of HLCB, Hong Leong Asset Management (HLAM) and its subsidiary, Hong Leong Islamic Asset Management (HLISAM) recorded a profit after tax of RM2.8 million, a decrease of 53.4% y-o-y. The lower profit was mainly due to lower management fee income from higher Money Markets funds’ redemptions arising from the removal of the money market tax exemption in January 2022.
