KUALA LUMPUR (May 30): Hong Leong Financial Group Bhd's (HLFG) net profit for the third quarter ended March 31, 2022 (3QFY22) was flat at RM577.48 million from RM577.27 million in the same period last year.

This was despite revenue for the quarter dropping 4.88% to RM1.5 billion from RM1.58 billion in the previous year.

Earnings per share stood at 50.9 sen and were unchanged compared with the same period a year ago, its bourse filing showed on Monday.

For the cumulative nine months ended March 31, 2022 (9MFY22), HLFG's net profit was up 5.06% to RM1.78 billion from RM1.69 billion mainly due to higher contribution from commercial banking, whereas revenue slipped 1.95% to RM4.61 billion from RM4.7 billion.

In a separate statement, HLFG said its commercial banking arm — Hong Leong Bank — recorded a net profit after tax (PAT) of RM2.38 billion for the period, an increase of 9.7% year-on-year (y-o-y), supported by top-line growth, prudent cost control, lower loan impairment allowances and robust contributions from associates.

The group's insurance business recorded a PAT of RM263 million, lower by 7.8% y-o-y, mainly due to the absence of one-off tax credit item in the prior year. Excluding this one-off tax credit item, the PAT for 9MFY22 would have increased by 9.2% y-o-y on a normalised basis, HLFG added.

The group said its investment banking business — Hong Leong Capital — recorded a PAT of RM64 million, a decrease of 51.5% y-o-y in comparison with last year due to lower income contributions from both investment banking and stockbroking division which were affected by a slower pace of mandated deals completion and lower traded volume on Bursa Malaysia.

In the statement, HLFG president and chief executive officer Tan Kong Khoon said he expects a broad-based economic recovery spurred by the reopening of borders as Malaysia and most of the world transition to the endemic phase of Covid-19 management.

He also noted that fiscal policies are expected to remain expansionary to support consumer spending and encourage business investment to create job opportunities.

Notwithstanding the improved outlook within Malaysia, Tan said there remains uncertainty and downside risks from inflationary pressure, persistent global supply chain disruptions, fallout from the armed conflict in Europe and a slowdown in China's economy.

"Against this uncertain global backdrop, the group continued to deliver steady performance in 9MFY22. Bank Negara Malaysia's recent 25-basis-point increase in the overnight policy rate may be mildly positive for our commercial banking business.

"[However,] the upward inflation trend would most likely put some pressure on our operating cost that calls for more stringent cost discipline going forward," he said.

At the time of writing, HLFG's share price was 12 sen or 0.62% lower at RM19.36, bringing a market capitalisation of RM22.31 billion.