KUALA LUMPUR: Hong Leong Bank Bhd is confident its asset quality will stay within guided range for FY2026 despite heightened risk environment from global trade and rate uncertainties.
Group managing director and CEO Kevin Lam said while defaults could edge higher, the bank does not expect a sharp deterioration.
“I wouldn’t exaggerate the risk, but default rates are more likely to rise than fall going forward. This is a period of dislocation and adjustment, a heightened risk environment compared to when conditions were more benign,” he told reporters at Hong Leong’s
full year (FY25) financial results briefing yesterday.
He said the outlook depends on where the China–US tariff rates eventually land, as well as the extent of US Federal Reserve rate cuts in the coming months and how Malaysia responds.
“These are very big global macro factors affecting us, and they reinforce that this is a heightened risk environment,” Lam said.
For FY26, Hong Leong Bank is guiding for loan growth of 6–7%, a net interest margin of 1.80–1.90%, and a return on equity of
11.5–12%, while maintaining its gross impaired loan ratio below 0.65% and credit cost under 10 bps.
The bank also targets a cost-to-income ratio at or below 39% and a CASA mix above 32%.
Hong Leong Bank Bhd recorded a 5.28% higher net profit for the fourth quarter ended June 30, 2025 at RM1.09 billion, compared with RM1.03 billion a year ago on higher net interest income, stronger Islamic banking contributions and improved fee-based income.
Net interest income grew 4.16% to RM1.02 billion from RM981.1 million, while Islamic banking income surged 16.43% to RM302.6 million and other operating income rose 25.45% to RM295.7 million.
The group posted revenue of RM1.62 billion for the quarter, compared with RM1.48 billion a year ago on higher net interest income (NII) and stronger non-interest income (NOII).
Additionally, Islamic banking income contributed positively, rising to RM303 million from RM260 million a year earlier.
The bank declared a final dividend of 68 sen per share, bringing the total payout for FY2025 to 96 sen per share, an increase of 28 sen compared with last year’s 68 sen dividend.
For FY2025, net profit increased 1.84% to RM4.27 billion from RM4.20 billion a year ago. Net interest income was 4.34% higher at RM3.99 billion while other operating income surged 29.83% to RM1.25 billion.
Hong Leong Bank’s net interest margin was up four basis points to 1.90% in FY2025 from the same period a year ago.
Current account saving account (Casa) grew 9.6% year-on-year to RM78.5 billion, while gross loans and financing rose 7.8% year-on-year to RM210.1 billion.
In terms of asset quality, gross impaired loans came in at 0.54%, while loan impairment coverage was 96.8% at end-June this year.
Hong Leong Bank’s common equity tier 1 capital (CET1) stood at 13.2%.