Hong Leong Bank earnings dip on BOCD drag, says Maybank IB
KUALA LUMPUR: Hong Leong Bank Bhd's nine months of financial year 2025 (9MFY25) results came in below expectations largely on account of lower earnings estimates from Bank of Chengdu (BOCD), according to Maybank Investment Bank Bhd (Maybank IB).
Hong Leong Bank's third quarter (Q3) FY25 core net profit of RM1.05 billion took 9MFY25 core net profit to RM3.29 billion.
Maybank IB said the results were 70 per cent to 72 per cent of the bank's full-year forecast/consensus, mainly on account of lower associate contributions and a higher effective tax rate.
"Lower associate contributions stemmed from the reduction in the group's shareholding in BOCD to 17.8 per cent from 19.8 per cent, following the full conversion of the latter's convertible bonds," it said.
Taking Hong Leong Bank's latest financial results into consideration, Maybank IB has trimmed its FY25/FY26/FY27 net profit forecasts by 3.4 per cent/6.1 per cent/6.4 per cent respectively, largely to factor in lower earnings from BOCD.
Correspondingly, the bank has lowered its target price from RM24.30 to RM22.80, and maintained a Buy on the stock.
"Nevertheless, we continue to like Hong Leong Bank for its strong asset quality, liquid balance sheet and management's proactive stance in driving faster domestic growth," it added.
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