Hong Leong Bank Berhad

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Bank Negara May Consider Lowering OPR as Counter-Cyclical Measure Amid Potential Growth Risk

Bank Negara Malaysia (BNM) may consider lowering the overnight policy rate (OPR) by 25 basis points (bps) as a counter-cyclical measure should signs of growth weakness emerge in the coming months, said Hong Leong Investment Bank (HLIB) today.

The investment bank said the weaker global economic trend combined with a relatively modest inflationary environment in Malaysia could give the central bank the room to act if necessary.

"We do not think BNM will act in a pre-emptive manner but adopt a wait-and-see stance until firmer evidence of growth slowdown develops," HLIB said in a research note today.

In addition, it noted that Malaysia's position as one of the less affected countries by the United States (US) tariff hike may help buffer domestic sentiment, especially if regional peers experience more pronounced slowdowns and have tighter monetary policy stances.

However, continued monitoring of employment, investment, and external demand would be key to determining the appropriate policy stance, HLIB said.

Malaysia has been hit with a 24 per cent tariff on its exports to the US, its third largest export partner, accounting for an average of 7.2 per cent of gross domestic product for 2011-2024.

Key Malaysian exports to the US include electrical and mechanical machinery, medical instruments, rubber, furniture, oil, plastics, iron and steel, aluminium and cocoa products.

These categories comprise 90 per cent of Malaysia's total exports to the US, with electrical and electronic (E&E) products comprising nearly 70 per cent.

In anticipation of the tariffs, HLIB noted that corporates have been front-loading imports since US President Donald Trump took office in January 2025, which is evident from Malaysia's export performance.

Shipments to the US surged by 28.5 per cent year-on-year (y-o-y) in January-February 2025, significantly outpacing the overall export growth of 3.3 per cent y-o-y, largely driven by early purchases of E&E products, particularly semiconductor devices and integrated circuits.

"This front-loading is expected to at least continue through the final month of the first quarter (1Q) of 2025, ahead of the 24 per cent tariffs coming into effect on April 9, at the start of the 2Q of 2025," HLIB said.

To help mitigate the impact of tariffs, the investment bank said Malaysia could consider increasing imports from the US while simultaneously diversifying its export markets.

"There are immediate opportunities in areas where Malaysia already imports substantial volumes from the US and could feasibly scale up purchases to help narrow the trade gap," it added.

- BERNAMA

$HLBANK / 5819 (HONG LEONG BANK BERHAD)

UOBKH TOP PICKS 2025

Adequately Charged Up.

While likely to kick off the year with caution, the FBMKLCI is still adequately electrified to deliver good positive gains, charged up by robust domestic liquidity. We introduce our end-25 FBMKLCI target of 1,800, and we anticipate the market to steadily adopt a progressively risk-on mode as we expect US president-elect Donald Trump to be pragmatic in executing trade policies. Key investment themes include Iskandar 2.0, data centre rollout and China’s economic recovery.

Compelling investment themes include: a) Iskandar 2.0; b) data centre project rollouts; c) China’s improving economic momentum; d) domestic consumption acceleration (tied to wage hikes); e) E&E sector: trade diversion and global semiconductor cycle recovery; f) Green Agenda and National Energy Transition Roadmap (NETR) opportunities; and g) blockchain. We also foresee trading opportunities in glove stocks (riding on the US’ scheduled steep tariff hikes on China glove products), selected consumer stocks (discretionary domestic consumption boosted by wage hikes), M&A activities and quality dividend yielders.

$RGB / 0037 (RGB INTERNATIONAL BHD)
$HLBANK / 5819 (HONG LEONG BANK BERHAD)
$PMETAL / 8869 (PRESS METAL ALUMINIUM HOLDINGS BERHAD)

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by CGSI

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by APEX

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research Report by TA

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research Report by MAYBANK

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research Report by KENANGA

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research Report by CGSI

KUALA LUMPUR: Hong Leong Bank Bhd (HLB) has unveiled its inaugural Sustainable Finance Framework (SFF), which aims to mobilise RM20 billion over the next five years to support green projects.

KUALA LUMPUR: Hong Leong Bank Bhd (HLB) is confident that the 2025 Budget will contribute to the long-term growth and sustainability of the Malaysian economy.  

© New Straits Times Press (M) Bhd

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by Maybank

KUALA LUMPUR: Hong Leong Bank Bhd (HLB) has issued RM500 million in nominal value of green medium-term notes (Green Senior MTN), pursuant to its multi-currency RM10 billion in nominal value medium-term notes programme.

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by CGS
ADD – TP RM30.00

" BOC thriving in the city of growth”

■ HLB associate Bank of Chengdu (BOC) said it expects net interest margin to recover in FY24-25F, with the downward re-pricing of its deposits.
■ We project associate contribution to HLB from BOC to grow by 10% in FY25- 26F and 8% in FY27F, following a CAGR of 12.3% in FY14-24.
■ Reiterate Add on Hong Leong Bank (HLB), given its above-industry loan growth in FY25F and positive outlook for the earnings growth of BOC.

Analyst:
Winson NG
winson.ng@cgsi.com

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by RHB
Buy – TP RM26.60

" Chengdu-ing Just Fine; Keep BUY”
We were recently invited to visit Chengdu in China, and observed that economic conditions in the city appear healthy. While this is certainly positive for Hong Leong Bank’s associate Bank of Chengdu (BOCD), we are also encouraged by HLBK’s efforts at powering up its domestic operations to narrow the growth gap with its Chinese counterpart. With and without its associate, we think HLBK, a sector Top Pick, is fundamentally robust, and is akey laggard play.
Analyst:
Nabil Thoo
nabil.thoo@rhbgroup.com
David Chong CFA
david.chongvc@rhbgroup.com

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by Maybank
BUY – TP RM 24.30

" Investment in China pays off ”

Hong Leong Bank’s (HLBK) investment in Bank of Chengdu (BOCD) has been a profitable one, so much so that the former may eventually look to scale back on its present 19.8% stake. Positively, this is supplemented by a push to drive higher earnings from its domestic operations. We maintain a BUY on HLBK with an unchanged TP of MYR24.30 (CY25E PBV target of 1.2x).

Analyst:
Desmond Ch'ng, BFP, FCA
desmond.chng@maybank-ib.com

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by TA
BUY – TP RM23.90

" HLB’s Golden Goose”

The meeting aimed to gain firsthand insights into Chengdu's economy and address prevailing concerns regarding a potential slowdown, both in the city and the broader Chinese macroeconomic landscape. Since BOCD contributes approximately 31% to HLB's overall earnings, any significant economic deceleration in Chengdu could materially affect the group's financial performance. Our analysis indicates that a one percentage point reduction in BOCD's contribution would negatively impact HLB's earnings by an estimated1.6%.

Analyst:
Li Hsia Wong
liwong@ta.com.my

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by RHB
Buy - TP RM26.60

"Results a Slight Beat, Prospects Are Bright"

Maintain BUY, new MYR26.60 TP from MYR23.60, 25% upside with c.4% FY25F (Jun) yield. Hong Leong Bank’s FY24 results came in just ahead of our estimates, thanks to its net loan impairment writeback and better-than-expected associate contributions. The bank met or exceeded all of its FY24 targets, and unveiled FY25F targets remain largely optimistic, alongside an improved appetite for dividend payouts. These, combined with its already solid fundamentals, compels us to remain upbeat on the counter.

Analysts:
Nabil Thoo
nabil.thoo@rhbgroup.com
David Chong, CFA
david.chongvc@rhbgroup.com

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by Maybank
Buy - TP RM24.30

"FY24 results within expectations"

HL Bank’s FY24 results were within our expectations and we raise our FY25/26E net profit forecasts marginally by 3%/1% respectively. Our FY25E ROE of 11.7% trails management’s forecast of 12%. We roll forward valuations to CY25 and upgrade our TP to MYR24.30 (+MYR1.30) on a lower PBV target of 1.2x (1.3x previously). BUY maintained.

Analyst:
Desmond Ch'ng, BFP, FCA
desmond.chng@maybank-ib.com

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by Kenanga
Outperform - TP RM26.20

"Solid End; Looking to Repeat"

HLBANK’s FY24 net profits (+10%) met expectations and alluded to possibly better dividend payouts in the future. It met all its report card targets and has set out to repeat them in FY25, where we find loans growth goals to be above-industry average and GIL to remain exemplary. Bank of Chengdu (BOCD) continues be a boon to the group’s bottomline growth. We introduce our FY26F numbers, maintain our OUTPERFORM call and GGM-derived PBV TP of RM26.20.

Analyst:
Clement Chua
clement.chua@kenanga.com.my

$HLBANK / 5819 (HONG LEONG BANK BERHAD)

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by TA
Buy - TP RM23.90

"Stronger FY25 Envisaged"

We updated the beta and lowered our market risk premium from 6% to 5.5% for the banking sector on the back of the improving economic environment in Malaysia, the banking system’s healthy asset quality and capital ratios, stable interest rate environment and more positive investor sentiments. With that, we raise HLBB’s TP from RM22.66 to RM23.90. Our valuation is based on an implied PBV of c. 1.33x based on the Gordon Growth Model and a 3% ESG premium. Buy maintained on HLBB.

Analyst:
Li Hsia Wong
liwong@ta.com.my

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by MIDF
Buy - TP RM22.76

"4QFY24 Results: Potential Fed Rate Cut Benefits?"

• FY24’s Core NP of RM4,196m was Within / Within our/street forecasts: 104 %/ 101 % of full-year forecasts
• Management’s tone: Optimistic
• Core themes: (a) Fed-cut induced NIM benefits, (b) FY25F loan growth target can be beaten, (c) Progress on Singapore’s wealth management segment.
• Forecasts revised: FY25F/26F Core NP adjusted by +5%/+8%
• Maintain BUY | Revised TP of RM22.76 | based on a revised FY25F P/BV of 1.16x (formerly 1.11 x)

Analyst:
Samuel Woo
samuel.woo@midf.com.my

$HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by CGS
Add - TP RM30

"Fifth consecutive quarter of NIM expansion"

■ HLB’s FY6/24 net profit was within expectations, accounting for 99% of our forecast and 98% of the Bloomberg consensus estimate.
■ We regard HLB as among the best Malaysian banks from a NIM perspective, as reflected by the qoq expansion of its NIM over the past five quarters.
■ Reiterate Add, given its above-industry loan growth in FY25F and one of the lowest credit charge-off rates in the sector.

Analyst:
Winson NG, CFA
winson.ng@cgsi.com

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

OTHERSHONG LEONG BANK BERHAD (the "Bank")
- Foreign Shareholdings as at 28 June 2024

BANKS
$CIMB / 1023 (CIMB GROUP HOLDINGS BERHAD) $HLBANK / 5819 (HONG LEONG BANK BERHAD)
Research by CGS
Overweight

“A marginal pull-back in loan growth”

According to Bank Negara Malaysia’s monthly release of data on the Malaysian banking industry, the industry’s loan growth moderated marginally from 6% yoy at end-Apr 24 to 5.8% yoy at end-May 24. The slowdown came mainly from the business loan segment, with the yoy expansion narrowing from 5.6% yoy at end-Apr 24 to 4.8% yoy at end-May 24. This was in line with our projection of 4-5% yoy increase in business loans in 2024F. Meanwhile, the growth momentum for household loans inched up from 6.2% yoy at endApr 24 to 6.3% yoy at end-May 24, with a slight pick-up in pace for both residential mortgages and auto loans.

Analyst(s):
Winson NG, CFA
winson.ng@cgsi.com