Hong Leong Financial Group (HLFG) has announced its FY24 results, which surpassed expectations due to stronger-than-anticipated contributions from its investment banking segment. The company reported a core net profit of RM806 million for 4QFY24, marking a 14% year-on-year increase but a slight 2% quarter-on-quarter decline. This brought the FY24 core net profit to RM3.2 billion, reflecting a 9.9% year-on-year rise and exceeding previous forecasts. Analysts have maintained a "BUY" recommendation on the stock and have raised the target price to RM22.70 from RM21.70, reflecting a 23% potential upside.

The results were buoyed by a robust performance from HL Capital, leading to a 6% upgrade in earnings forecasts for FY25 and FY26. The investment bank segment experienced exceptional growth, with HL Capital's pretax profit surging 98% year-on-year, driven by notable increases in stockbroking (up 73%), investment banking (up 58%), and asset management (up 94%). This strong performance in capital markets significantly contributed to the overall positive results.

HL Bank's 4QFY24 core net profit of RM1.03 billion, up 14% year-on-year but down 1% quarter-on-quarter, brought the FY24 net profit to RM4.2 billion, a 9% increase from the previous year. These results were in line with forecasts and reflected robust loan growth of 7.3% year-on-year. However, net interest margin (NIM) contracted by 12 basis points to 1.86% for FY24, consistent with management's guidance. Operating income rose by 1.5% year-on-year, although operating profit remained relatively flat with a slight decrease of 0.6% year-on-year. Core net profit increased by 9% year-on-year, bolstered by further credit cost writebacks.

HLA Holdings also contributed positively, with a 3% year-on-year increase in pretax profit, primarily driven by a 29% rise in contributions from its associate, MSIG General. While HL Assurance's pretax profit remained stable year-on-year, its embedded value grew by 12.9% to RM4.27 billion. The investment bank's exceptional performance highlights HLFG's solid position in the financial sector and its ability to capitalise on favourable market conditions.