About Us

The business environment in FY2023 proved to be challenging for our operations. On the external front, the global economy experienced a broad-based slowdown with high inflation that resulted in tighter financial conditions. The banking crisis in parts of the United States (“US”) and Europe and the property sector problems in China dampened investor confidence while the ongoing geopolitical tensions weighed on global economic activities.

Despite softer external conditions, the Malaysian economy registered strong positive growth benefiting from the post COVID-19 private consumption demand momentum, ongoing supportive government policies and continued labour market recovery. Growth was also lifted by the low base effect, global technology up-cycle and increase in commodity prices.

While the domestic economy was gaining momentum, the operating environment for our business proved challenging due to elevated cost of funds as Bank Negara Malaysia (“BNM”) raised the Overnight Policy Rate (“OPR”) from a record low of 1.75% to 3.00% over the course of the year. This was further exacerbated with investors and businesses adopting a more cautious stance to investments in the run-up to the 15th General Election (“GE15”) in November 2022.

Consequently, the domestic bond market experienced a tale of two halves in FY2023. The Malaysian bond market saw a net outflow of RM6.7 billion in the first half of FY2023 against a backdrop of tighter global financial conditions and the political developments in the run-up to GE15. However, the markets registered a reversal in the second half of FY2023 with a net inflow of RM17.8 billion partly due to investors seeking to diversify away from the United States and European Union following the banking turmoil, as well as the attractiveness of local bonds given the easing of domestic inflation.

The Malaysian stock market, as referenced by the FTSE Bursa Malaysia Kuala Lumpur Composite Index (“KLCI”), witnessed a rather volatile first half of FY2023 and ended at 1495 points, an increase of 51 points or 3.6% from the start of our financial year. The modest gains in the first half of FY2023 did not sustain into the second half due to external headwinds stemming from the banking upheaval in the West, US debt ceiling impasse, continuation of the Federal Reserve’s interest rate upcycle and weaker-than-expected economic data from China despite its post COVID-19 reopening. As a result, the KLCI declined by 119 points or -7.9% during the second half of FY2023 and overall Bursa Malaysia market trading activity remained subdued during our financial year.

The Group ended the financial year with a Profit before Tax (“PBT”) of RM61.4 million, a drop of 36.8% year on year (“y-o-y”) as our key operating subsidiaries navigated a rising interest rate and weaker investment environment.

In view of the uncertain economic outlook, the Group is recommending a final dividend of 17.0 sen per share as compared to 19.0 sen per share declared for the previous financial year, amounting to dividends payable of RM42.0 million for FY2023.

Our Investment Banking business, was impacted by higher interest rates and thinner trading liquidity. Our Treasury & Markets division experienced higher funding costs that narrowed our net interest margin while the thinner trading liquidity reduced trading opportunities. The lack of larger deals and lower market activities also caused a weakened performance for our Equity Markets division. However, our Debt Markets division staged a healthy recovery in the current financial year following the completion of key mandated deals that were previously delayed. Hong Leong Investment Bank Berhad (“HLIB”) remained steadfast to provide deep value to our clients and was honored with 20 awards during the financial year up to the time of our writing. Some of the most notable awards are the Best Domestic M&A Deal of the Year in Malaysia awarded by Alpha Southeast Asia for the completion of the disposal of concession highways for Gamuda Berhad, where HLIB was the Principal Adviser, and eight prestigious awards accorded by Alpha Southeast Asia, Islamic Finance News, Malaysian Rating Corporation and The Asset for the issuance of RM5.5 billion Sustainability Sukuk Murabahah Programme by Amanat Lebuhraya Rakyat Berhad, where HLIB was the Joint Principal Adviser, Joint Lead Arranger and Joint Lead Manager. Overall, the revenue and PBT achieved from Investment Banking business in FY2023 was RM53.4 million and RM13.1 million respectively.

The financial performance of our Stockbroking business was negatively affected by the continued lackluster Bursa Malaysia market trading activity which has contracted 25.5% y-o-y. The retail participation in the overall market mirroring this drop has directly impacted our market share translating to a lower net brokerage income of RM44.7 million for FY2023, a decrease of 33.5% from the last financial year. Despite a weaker performance, HLIB was named 2nd runner up for Best Retail Equities Participating Organisation – Investment Bank in the Bursa Excellence Awards 2022 for the 4th consecutive year. The division continued to enhance its product and services offerings by launching our Shariah trading platform and a fully digitalised account opening experience for our clients. The business also expanded its footprint into Kuantan and launched client acquisition campaigns with more than 4,600 new account openings and accounts reactivation numbers exceeding 7,000.

The fund management business of HLCB, undertaken via our subsidiary, Hong Leong Asset Management Bhd (“HLAM”) and its subsidiary, Hong Leong Islamic Asset Management Sdn Bhd (“HLISAM”) recorded a revenue of RM47.0 million for FY2023, a reduction of 20.0% y-o-y. The weaker performance is attributed to the contraction of Assets Under Management (“AUM”) by 26.1% in the Money Market Funds segment driven by the withdrawal of tax exemption for this category of funds. Nevertheless, HLAM continued to deliver impressive fund performance by winning 20 individual awards at the Refinitiv Lipper Fund Awards Malaysia 2023 and Refinitiv Lipper Fund Awards Global Islamic 2023. These award-winning funds have recorded a total of RM170.1 million increase in AUM y-o-y. HLAM has also launched its first Private Retirement Scheme (“PRS”) in December 2022 and its second Environmental, Social and Governance (“ESG”) funds, namely Hong Leong Global Shariah ESG Fund, in January 2023 catering to the diverse needs of our clients. HLAM and HLISAM’s long term objective remains to ensure consistent and competitive investment returns for our clients.

The Group’s balance sheet and risk metrics remained strong and is supported by solid and healthy asset quality. The book value per share has risen from RM4.01 as at 30 June 2022 to RM4.09 as at 30 June 2023. Total capital ratio of our key operating subsidiary, HLIB, was 46.01% as at 30 June 2023, which was in excess of the minimum regulatory total capital adequacy of 10.5% set by BNM.

We are committed to good governance, emphasising corporate responsibility, transparency, and accountability by continuously enhancing our risk management frameworks to proactively address emerging risks, adapting to our dynamic operating environment. Our Board and Management works collaboratively to align strategies with the interests of our shareholders and stakeholders.

Our dedication to governance, professionalism, ethics, and integrity is at the core of our business conduct. We foster a culture of compliance and integrity, adhering to best practices for accountability, transparency, and long-term sustainability. Our firm stance against bribery and corruption reflects our ethical corporate culture. Board committees diligently oversee risk management, compliance, controls, technology, cyber security and sustainability matters.

We implement comprehensive group-wide policies and procedures, including the Board Charter, Code of Conduct and Ethics, Anti-Bribery and Corruption Policy, Gifts and Entertainment Policy, and Whistleblowing Policy, which are reviewed annually to ensure their effectiveness. Transparent communication and understanding are crucial across the organisation, with employees attesting to key policies. Compliance controls are diligently monitored, with results reported to the relevant committees. In-house and external training sessions are conducted to further enhance governance awareness among directors and employees.

In the recent years, HLCB has been accelerating its sustainability agenda and is committed to grow the Group in a sustainable and meaningful way. Last year, the Group has introduced the Sustainability Framework (“Framework”) which is guided by four central pillars, namely Engaging on Sustainability, Addressing Climate Change, Strengthening Internal Capabilities and Impactful Digitalisation. These pillars have helped us pave the way to be included into Bursa Malaysia’s FTSE4Good Index in FY2023, signifying a key milestone in our sustainability journey.

Our key operating subsidiary, HLIB has also been awarded with four ESG awards, which includes the Best Green Bond Award for the issuance of RM900 million Green Additional Tier 1 Capital Securities for Hong Leong Bank Berhad, the Best Sustainability Sukuk – Transport and Transport Deal of the Year for the issuance of RM5.5 billion Sustainability Sukuk Murabahah Programme issued by Amanat Lebuhraya Rakyat Berhad by The Asset. The Bond Pricing Agency Malaysia has also awarded HLIB with Top ESG Issuance Award from the completion of the issuance of the said Sustainability Sukuk by Amanat Lebuhraya Rakyat Berhad.

Accessibility to sustainable investing have been made possible to our clients when our asset management business launched the Hong Leong Global ESG Fund and Hong Leong Global Shariah ESG Fund. The Stockbroking division was also a participant in Bursa Malaysia’s Shares2Share scheme since November 2022, where investors are given the opportunities to donate their listed securities, or proceeds from the sale of listed securities, towards specific charities.

To further our commitment to sustainability, we are refreshing the assessment on sustainability material matters to deliver priorities which are aligned to our stakeholders’ expectations. Additionally, the Group is also expanding the measurement of the greenhouse gas (“GHG”) emissions to include employees commuting under Scope 3 enabling a holistic view in managing climate risks. These are aligned to the evolving ESG landscape driven by regulatory push and the need to transition towards a low carbon economy to make a positive impact to our stakeholders, communities and the environment.

Looking ahead, the global economy is expected to expand at a slower pace amid an elevated inflationary climate, tight monetary conditions and sluggish external trade flows. Despite these headwinds, the Malaysian economy is anticipated to moderate but remain on a positive trajectory, supported by resilient domestic demand and investor friendly initiatives by the government to spur foreign direct and private investments into Malaysia. Nevertheless, we remain cautious on the business environment as we anticipate slower growth momentum in the first half of FY2024 but are hopeful that economic conditions will improve by the second half of FY2024.

We shall calibrate our business strategies and adapt as necessary to changing circumstances to deliver sustainable business performance and long-term value for all stakeholders. The digitalisation agenda will garner a greater focus in the coming year, aimed at driving operational efficiency and delivering seamless solutions which are more client centric, simpler and faster to our clients.

Integrating ESG into the way we conduct our business undertakings will be another key focus area as we seek opportunities to grow our footprint to cater for the financial needs of our clients while leveraging on our innovative capability to deliver long term sustainable growth for the Group.

I would like to take this opportunity to express my appreciation and gratitude to the Board of Directors, Management and our employees for their dedication and commitment.

My sincere appreciation also goes to our regulators, shareholders, clients, business partners and all other stakeholders. Thank you for your support and we appreciate your continuous support as we look forward to a year of growth for the Group.