Hong Leong Financial Group Bhd’s (HLFG) net profit in the third quarter (Q3) ended March 31, 2020 eased to RM339.2 million from RM463.41 million in the same quarter last year.

Revenue for the quarter declined to RM1.14 billion against RM1.3 billion year-on-year.

In a filing with Bursa Malaysia today, HLFG said the weaker performance was mainly due to the lower contribution from all operating divisions.

For nine-month period, HLFG recorded a lower net profit of RM1.33 billion from RM1.45 billion in the same period last year, while revenue for the period fell to RM3.83 billion from RM3.94 billion a year ago, mainly due to lower contribution from the commercial banking and insurance divisions.

The company said its commercial banking arm, Hong Leong Bank Bhd, recorded a net profit of RM1.93 billion for the nine-month period, supported by sustained loan growth, prudent cost control and solid contributions from associates.

“Net interest margin for the period stood at 1.97% despite two overnight policy rate cuts during the first quarter of 2020, while cost-to-income ratio was maintained at 44.2% and loans growth grew better-than-market by 6.6% year-on-year to RM142.4 billion despite a relatively softer business environment,” it said.

It said the bank’s gross impaired loans ratio stood at 0.98%, amongst the best in the industry, while loan impairment coverage (LIC) ratio was maintained at a prudent level of 91% as at March 31, 2020.

“Inclusive of regulatory reserve, the bank’s LIC ratio stood at a comfortable 159%,” it said.

It said loan-to-deposit ratio remained strong and was one of the lowest in the industry at 84.8%.

HLFG said its insurance arm, Hong Leong Assurance Bhd, reported a net profit of RM74.7 million for the nine months period, impacted by lower interest rates and a number of one-offs, including the new Minimum Allocation Rate rules implemented effective July 1, 2019.

It said HLA’s management expense ratio remained among the lowest in the industry at 6.3% during the period.

It added that HLA would also continue to focus on creating higher New Business Embedded Value.

HLFG president and chief executive officer Tan Kong Khoon said the company remained vigilant in prudently managing key business risks and expected core strengths of operating businesses in liquidity, capital and credit discipline to serve it well amid a highly challenging business environment due to COVID-19.

“While our strong digital offering enabled us to keep in close contact and serve our customers during these difficult times, we will continue to further strengthen our digital strategy to build long-term sustainable value for our shareholders,” he said.