KUALA LUMPUR (May 29): Hong Leong Financial Group Bhd (HLFG) recorded a 26.8% year-on-year decline in its third quarter net profit, on the back of lower earnings from all its operating divisions.
The group's net profit for the three months ended March 31, 2020 (3QFY20) fell to RM339.2 million from RM463.42 million, while quarterly revenue retreated 12.6% to RM1.14 billion from RM1.31 billion, its stock exchange filing today showed.
During the quarter, its commercial banking arm Hong Leong Bank Group's profit before tax (PAT) sank 18.2% to RM637.2 million from RM778.7 million, amid lower revenue, higher operating expenses and a higher allowance for impairment losses on loans, advances and financing that amounted to RM121.2 million.
Its insurance arm HLA Holdings Group, notably, sank into the red with a loss before tax of RM42.9 million compared to a PAT of RM83.8 million previously, as it recorded an unrealised loss on revaluation of equities, and a lower life fund surplus of RM55.6 million.
Its investment banking and asset management business Hong Leong Capital Group also recorded a lower PAT of RM10.5 million, down 42.9% from RM18.4 million previously, on lower contribution from the investment holding and asset management divisions.
No dividend was declared this quarter. Its cumulative dividend payout for the nine months ended March 31, 2020 (9MFY20) stands at 13 sen per share, as opposed to 42 sen declared in the corresponding period last year.
For 9MFY20, HLFG's net profit dropped 8.3% year-on-year to RM1.33 billion from RM1.45 billion, while revenue retreated 2.8% to RM3.83 billion from RM3.94 billion. "The decrease was mainly due to lower contribution from the commercial banking and insurance divisions," HLFG said.
In a statement, HLFG president and chief executive officer Tan Kong Khoon said the group will continue to manage its key business risks.
“In the midst of a highly challenging business environment with both domestic and global economies impacted by the ongoing Covid-19 pandemic, we remain vigilant in prudently managing key business risks and expect the core strengths of our operating businesses in liquidity, capital and credit discipline to serve us well.
"While our strong digital offering enabled us to keep in close contact and serve our customers during this difficult time, we will continue to further strengthen our digital strategy to build long-term sustainable value for our shareholders,” said Tan.
At the time of writing, HLFG shares were trading 6 sen lower at RM13.34, giving it a market capitalisation of RM15.35 billion.