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RAM Ratings affirms ratings of Hong Leong Financial Group and banking subsidiaries
Published on 22 May 2026.
RAM Ratings has affirmed Hong Leong Financial Group Berhad’s (HLFG or the Group) AA1/Stable/P1 corporate credit ratings (CCRs) and the AAA/Stable/P1 financial institution ratings (FIRs) of its banking subsidiaries, Hong Leong Bank Berhad (HLBB), Hong Leong Islamic Bank Berhad (HLISB) and Hong Leong Investment Bank Berhad (HLIB). All related issue ratings were also affirmed (Table 1).
The affirmation is premised on HLFG’s strong domestic retail and SME franchises and excellent risk profile. The one-notch differential between HLFG’s long-term CCR and the subsidiaries’ FIRs reflects structural subordination at the holding company level. HLBB is the Group’s core subsidiary, with HLISB and HLIB supporting the Group’s respective strategic Islamic and investment banking franchises, which underpin their ratings.
HLFG’s asset quality remains among the strongest in the industry, with a gross impaired loan ratio of 0.59% as at end-December 2025, well below the industry average. In the absence of provision writebacks, credit costs normalised to 7 bps in 1H FY Jun 2026. Loan loss coverage (including regulatory reserves) stayed solid at 241% as at end-December 2025, providing a strong buffer against potential asset quality pressures.
HLFG posted a resilient pre-tax profit of RM3.2 bil in 1H FY Jun 2026, underpinned by steady fee and investment income and disciplined cost controls, keeping its return on assets largely unchanged at 1.8% (annualised). While industry-wide margins were pressured by an overnight policy rate cut, sustained loan growth kept net interest income stable. Margins should see some reprieve as deposits gradually repriced downward in 2H FY Jun 2026. Profit contribution from Bank of Chengdu Co. Ltd moderated to RM683 mil (1H FY Jun 2025: RM775 mil), reflecting HLBB’s reduced equity stake and a weaker renminbi.
The Group’s funding profile is supported by a strong retail deposit base, with individuals accounting for about half of total deposits as at end-December 2025 (industry: 37%). The loans-to-deposits ratio stayed comfortable at 88% while liquidity coverage and net stable funding ratios were a respective 133% and 116%. Capitalisation across the Group remains sound vis-à-vis its risk profile, with HLFG’s common equity tier-1 capital ratio at 11.3%, and all banking subsidiaries reporting ratios above 12%.
Analytical contacts
Sean Lim, CFA
(603) 2708 8253
sean@ram.com.my
Chew Chiang Lim
(603) 2708 8297
chianglim@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2026 by RAM Rating Services Berhad
Rating Rationale: Hong Leong Financial Group Berhad
Rating Rationale: Hong Leong Bank Berhad
Rating Rationale: Hong Leong Islamic Bank Berhad
