Hong Leong Capital Berhad (HLCB) recorded a net profit of RM22.7 million, an increase of 41.8% year-on-year (YoY), for the first quarter of financial year ended 30 September 2023 (1QFY24).
This is mainly due to better performance in HLCB’s proprietary investment and higher profit contribution from its key operating subsidiary, Hong Leong Investment Bank Berhad.
Its chairman Tan Kong Khoon said the group started the new financial year with positive results, recording an improved profit before tax (PBT) of RM27.4 million, a 31.7% increase over RM20.8 million YoY.
“The improved results were mainly driven by our stockbroking division, contributing 65% of the PBT. This was on the back of higher Bursa Malaysia trading volume year-on-year.
“There was renewed investor interest following the conclusion of the state elections, and the launch of the Malaysia National Energy Transition Roadmap (NETR) and Madani Economy plans,” he said.
Kong said looking ahead, the outlook for the capital market and investment activities in Malaysia is anticipated to remain uncertain.
“In spite of a projected modest expansion in the economy, weighed down by weaker external demand, tight credit conditions and geopolitical tensions in the Middle-East.
“As our business environment remains susceptible to these conditions and external headwinds, we will remain vigilant against these risks by constantly exercising discipline in managing our capital, liquidity and costs efficiencies to deliver sustainable results to our stakeholders,” he added.
As at 30 September 2023, the book value per share decreased to RM3.99 from RM4.09 as at 30 June 2023 after declaration of a final single-tier dividend of 17 cents for financial year ended 30 June 2023.
On the performance of the group’s subsidiary, HLIB, it recorded a net profit after tax of RM12.9 million, an increase of RM700,000 YoY arising from higher profit contribution from its stockbroking division.
“The stockbroking division delivered a strong comeback with a YoY increase of 68% in PBT. This follows the bank’s increased market share of 4.35% compared to 3.56% last year, as well as a 28% uptick in Bursa’s market activity YoY.
It said that HLIB is also constantly innovating its offerings to remain competitive and cater to varying customers’ needs, such as introducing zero brokerage for first trade as part of its online onboarding campaign.
Higher funding cost continued to affect HLIB’s performance in investment banking, resulting in net interest margin compression and thinner trading liquidity, limiting trading opportunities.
Meanwhile, the bank’s Equity market segment faced challenges with lower market activities and delay in the completion of mandated deals.
“However, HLIB continued its uptrend momentum in the Debt market segment, following the completion of key mandated deals including the issuance of the first Climate Bonds Initiatives (CBI)-qualified solar power Sukuk in Malaysia and the world.”
Overall, the Bank’s Capital position remains robust with Common Equity Tier 1, Tier 1 and Total Capital Ratios at 38.2%, 38.2% and 49.2% respectively as at 30 September 2023.
