PETALING JAYA: Analysts have maintained their “buy” calls on Hong Leong Financial Group Bhd
(HLFG) and Hong Leong Bank Bhd (HLB) stating that both delivered solid sets of earnings.
In a report, MBSB Research liked HLFG largely due to its subsidiary HLB’s strong fundamental outlook and growth prospects.
The research outfit said HLB had strong growth prospects and is gradually increasing its dividend payout.
Most importantly, the group has announced a further intention to pare down its Bank of Chengdu Co Ltd’s stake, which should free the group from its persistent share price overhang and provide special dividends.
MBSB Research noted that despite the rapid loan growth in first quarter ended Sept 30 (1Q26), management is sticking to its initial financial year 2026 (FY26) guidance of 6% to 7%.
“It believes it will achieve or slightly exceed the upper bound figure.
“One reason for this is that the group has slowed down its small medium enterprise loan growth in the last couple of quarters.”
HLB is not overly worried about the large Singapore impairment seen this quarter, as it is already fully collateralised, noted MBSB Research.
“As a result, management is comfortable with this quarter’s lowered loan loss coverage figure of 90%. Overlay balance is untouched, remaining at RM175mil.”
It also said despite posting a low cost-income-ratio of 36% in 1Q26, the group is retaining its FY26 target of 39%.
“We think the group has to maintain a decent level of spending to retain its high level of growth.
“HLB also strikes us as taking digitalisation a lot more seriously than most of its peers – its efforts should reap rewards soon,” said MBSB Research.
MBSB has maintained its “buy” calls on both HLFG and HLB, with a target price of RM22.61 for HLFG and RM23.94 for HLB.
At last look, HLFG was at RM17.44 while HLB was at RM21.18.
HLB saw its net profit come in at RM1.09bil, which was on par with earnings in the same period, a year ago.
This came on the back of higher quarterly revenue of RM1.68bil against RM1.6bil in the comparative quarter, underpinned by a growing loans portfolio and sustained non-interest income.
“Our operating profit before associate contribution recorded commendable growth of 7.8% year-on-year (y-o-y) to RM1.04bil in 1Q26.
“This was achieved despite the anticipated NIM compression following the 25 basis points overnight policy rate cut in July 2025, demonstrating our ability to manage profitability,” said group managing director and CEO Kevin Lam in a statement.
In its report, TA Securities said HLB delivered a solid performance, with its three-to-five-year transformation plan firmly on track.
“Growth was supported by strong loan and financing expansion, healthy non-interest income, and disciplined asset quality management.
“Core pre-Bank of Chengdu earnings continued to improve, backed by loan and financing growth that not only exceeded industry trends but also surpassed management’s guidance.
“Overseas operations, especially Singapore and Vietnam, continued to post strong year-on-year gains, adding further depth to overall performance.”
