Hong Leong Bank (HLB) has delivered a solid performance for FY6/24, with net profit meeting expectations at RM4.20 billion, accounting for 99% of forecasts and 98% of Bloomberg consensus estimates. This marks a 9.9% year-on-year increase, driven by a net write-back of RM114.3 million in loan loss provisioning and a 23.1% rise in associate contributions from the Bank of Chengdu (BOC).
HLB’s consistent growth trajectory is underscored by its fifth consecutive quarter of net interest margin (NIM) expansion. The bank’s NIM increased from 1.82% in 3QFY23 to 1.89% in 4QFY24, distinguishing it from many Malaysian peers who have faced volatile NIM trends. The bank’s proactive management of asset quality has been reflected in consecutive net write-backs in loan loss provisioning over the past four quarters.
Analysts have noted several positive outlooks for HLB. Hong Leong Bank is projected to achieve a 6.1% net profit growth in FY25F, supported by an 8% increase in operating revenue. Hong Leong Investment Bank has reiterated an ADD rating, highlighting the bank’s above-industry loan growth and low credit charge-off rates. This bank also maintains an OUTPERFORM rating, noting a potential 25% upside with a target price of RM26.20. Last but not least, an analyst also maintained a BUY call with a revised target price of RM26.60, reflecting confidence in the bank’s prospects and ongoing positive contributions from BOC.
HLB’s management remains optimistic about FY25, forecasting continued loan growth above industry averages and an improved NIM range of 1.85%-1.95%. The bank aims to capitalise on potential benefits from possible cuts in US interest rates, which could positively impact its NIM. Additionally, Hong Leong Bank plans to leverage its strong performance in SME and commercial banking segments to further enhance its asset yield and support future growth.
