Hong Leong Financial Group Posts 11% Profit Jump, Declares 57 Sen Dividend

Hong Leong Financial Group Bhd (HLFG) has declared a dividend of 57 sen per share following the announcement of a robust 11% increase in net profit for the fourth financial quarter ended June 30, 2026 (4QFY2026). The financial services arm of the Hong Leong Group reported quarterly net profit of RM945.5 million, up from RM852.3 million a year earlier, while revenue expanded 16% year-on-year to RM2.05 billion from RM1.76 billion, according to a bourse filing.

The single-tier dividend of 57 sen per share brings the financial group's total dividend declared for the full FY2026 to 79 sen per share. The payment date will be announced at a later stage, the group said.

For the full financial year, HLFG's annual net profit rose 5.5% to RM3.43 billion from RM3.25 billion, in line with a 5.4% increase in annual revenue to RM7.6 billion from RM7.22 billion a year ago. The results reflect the group's ability to sustain growth momentum despite a more challenging operating environment characterised by geopolitical tensions and evolving trade policies.

Gross loans, advances and financing grew 7.7% year-on-year to RM226.3 billion from RM210.1 billion, slightly below the 7.8% growth recorded in FY2025. The expansion was driven by broad-based growth across the mortgage, auto loans, small and medium enterprise, and commercial banking segments, as well as key overseas markets. Notably, domestic loans and financing expanded 7.1%, outpacing the industry growth rate of 5.5% year-on-year, underscoring HLFG's competitive positioning in its home market.

However, the group's net interest margin (NIM) narrowed to 1.84% in FY2026, down from 1.90% the previous year. As a result, net interest income grew at a slower pace of 3.2% to RM5.09 billion, compared with 5.5% growth in FY2025, despite the larger loans and financing base. The compression in NIM reflects the dual pressures of competitive pricing in the lending market and the cost of funding, which have squeezed margins across the banking sector.

Non-interest income, which includes fees, commissions, and trading income, increased 9.3% year-on-year to approximately RM1.61 billion from RM1.47 billion. The growth was driven by higher wealth management activities and strong performance from global markets franchise sales. However, this represented a significant moderation from the 33.5% surge recorded a year earlier, suggesting that some of the exceptional gains realised in FY2025 were not repeated.

Looking ahead, HLFG said it will remain vigilant through proactive risk management amid ongoing uncertainties arising from geopolitical conflicts in the Middle East and evolving protectionist trade policies. The group noted that it will continue to strengthen its business franchises to adapt to the changing operating environment while pursuing new growth opportunities for sustainable expansion. The cautious yet forward-looking stance reflects management's awareness of external headwinds while maintaining confidence in the group's underlying fundamentals.

Meanwhile, HLFG's investment banking and fund management division, Hong Leong Capital Bhd (HLCAP), also announced its quarterly results. For 4QFY2026, HLCAP's net profit increased 6.7% to RM18.8 million from RM17.6 million a year earlier, while revenue remained largely flat at RM94.4 million. The division declared a dividend of 18 sen per share, down from 19 sen a year ago, with the payment date to be announced in due course.

For the full FY2026, HLCAP's annual net profit climbed 12% year-on-year to RM65.6 million from RM58.4 million, while revenue edged up 0.8% to RM351.3 million from RM348.4 million. The results indicate steady performance in the investment banking and asset management segments, though revenue growth remained subdued.

In the stock market, HLFG shares added four sen to RM18.78 at Thursday's noon break, giving the group a market capitalisation of RM21.6 billion. Hong Leong Capital shares were down one sen or 0.3% at RM3.13, valuing the division at RM772.8 million. The market's mixed response suggests investors are weighing the group's solid operational performance against the narrowing margins and cautious outlook.

Overall, HLFG's FY2026 results demonstrate resilience in a complex operating environment. The group's ability to grow loans ahead of the industry average, maintain a strong capital position, and return value to shareholders through dividends positions it well for the challenges ahead. However, the narrowing net interest margin and slower growth in non-interest income serve as reminders that the banking sector faces headwinds that will require careful navigation in the coming year.