KUALA LUMPUR: Hong Leong Bank Bhd
(HLB) says this financial year will be a more challenging than the last one, given pressures from the external environment hence it is cautiously optimistic in the guidance for some of its key performance indicators for the financial year ending June 30, 2027 (FY27).
Group managing director and chief executive officer Kevin Lam said higher fuel prices as a result of the war in Iran will have an impact on all groups of people, both here and in the region.
“It will be more challenging because the war in Iran just started this year and oil prices have shot up,” he said at a media briefing here yesterday.
“Naturally, with our portfolio of housing loans, auto loans and personal loans, consumers may be impacted, similiarly the fuel cost will also impact small medium enterprises, hitting transportation, raw material and labour costs,” Lam said.
Hence, the lender needed to be more “prudent” in its approach to loan growth, and credit underwriting.
“At the moment because of the quality of our portfolio, we do not see any need for us to increase the provisions, at this point in time,” he added.
HLB is guiding for a gross loans growth of 6% to 7% for FY27 after it saw a growth of 7.7% in FY26. It is also guiding for a gross impaired loan (GIL) of less than 0.65% after reporting a GIL ratio of 0.57% in FY26.
Meanwhile, chief financial officer Malkit Singh said the bank was “quite confident” for the GIL ratio to come in within its target, or even better than it.
“The other pressures are in terms of the net interest margin (NIM) and competition around the deposit space, deposit competition is really great,” he said.
HLB’s NIM stood at 1.84% in FY26, and it has guided for a NIM of 1.80% to 1.90% for FY27. It is also guiding for a return on equity (ROE) of 11% to 11.5% in FY27 after turning in an ROE of 11.2% in FY26.
For FY26, HLB reported a net profit of RM4.53bil on revenue of RM6.69bil compared to a net profit of RM4.27bil on revenue of RM6.4bil in FY25.
“This profit was driven by sustained top-line growth, strategic cost management and solid asset quality,” the lender said.
It said that operating expenses for FY26 were effectively managed, yielding positive Jaws through its emphasis on artificial intelligence integration and strategic cost management initiatives, achieving a sustainable cost-to-income ratio of 37.6%.
HLB said loans to deposits ratio stood at 88.7% as at June 30, with the rolling 12 months average liquidity coverage ratio at 127%, well above regulatory requirements.
The bank prudently manages these ratios to ensure it is at a healthy funding and liquidity position, it said.
Meanwhile, customer deposits for FY26 increased 5.5% year-on-year (y-o-y) to RM252.1bil while current account savings account (Casa) grew at a faster pace of 11.3% y-o-y to RM87.4bil.
The Casa ratio was higher at 34.7%, supported by the lender’s community deposit acquisition initiatives and the offering of innovative cash management solutions, it said.
