#1F H1FY23 RESULTS ANALYST PRESENTATION 28 FEBRUARY 2023 Hong Leong Bank The information contained in this presentation is strictly confidential for information of the intended recipient(s) only. The information may not be reproduced, redistributed or transmitted, directly or indirectly by any means to any other person or published electronically or via print, in whole or in part, for any purpose without our prior written permission. When no longer needed, it should be immediately deleted from all electronic storage devices and/or any other retrieval system of any nature and any hardcopies made should be destroyed. The intellectual property in the presentation belongs to HLBB unless specifically indicated otherwise.#21 Financial Highlights: H1FY23 Hong Leong Bank HLB H1FY23 ended 31 December 2022 2#3Key Financial Highlights Resilient performance amidst challenging operating environment Total Income • Improved topline underpinned by • loan/financing expansion and stronger non- interest income contribution RM'mil 2,986 2,751 9% H1FY22 H1FY23 GIL & Coverage Ratio • Asset quality remains solid with sufficient loan impairment coverage • 282% 280% 212% 210% LIC (including security value) 0.49% 0.49% FY2022 H1FY23 Opex & CIR Optimised expenses, delivering positive JAWS with an improved CIR • 37.1% 36.4% RM'mil 1,087 1,020 H1FY22 H1FY23 Hong Leong Bank Operating Profit Healthy profitability supported by stronger underlying business performance RM'mil 1,900 1,731 10% H1FY22 H1FY23 Gross Loans/Financing Loans/financing portfolio maintained solid growth trajectory led by mortgages, SME and commercial business banking Deposits Expansion in deposit base while maintaining stable CASA RM'bil 172.3 160.1 ▲ 8% H1FY22 H1FY23 RM'bil 198.9 188.6 A5% HLB H1FY23 ended 31 December 2022 H1FY22 H1FY23 3#4Management Guidance All KPIs within guidance Target FY2023 Hong Leong Bank 7%- 7.5% ~10 ~2.14% ≤38% ~0.60% >12.0% >30% bps Gross Loan Growth Net Interest Margin Cost-to- Income Ratio Gross Impaired Net Credit Cost Return on Equity CASA Mix Loan Ratio Achieved H1FY23 7.6% 2.14% 36.4% 0.49% 4 bps 12.8% 31.3% HLB H1FY23 ended 31 December 2022 4#5Profit & Loss Commendable performance led by strong topline growth and robust associates contribution Profit After Tax Hong Leong Bank 102 133 RM'mil 66 99 1,597 169 71 18 2,024 PAT H1FY22 Net Interest Income Non Interest Income Opex Loan & Other Impairment Allowances Associates Contribution Tax PAT H1FY23 • Improved topline from loan/financing expansion and higher non-interest income contribution • Upheld strong asset quality metrics with modest loan impairment allowances Robust contribution from associates RM'mil Total income Operating expenses H1FY22 H1FY23 Change % (YoY) 2,751 2,986 8.5% (1,020) (1,087) 6.5% Operating profit before allowances 1,731 1,900 9.7% Allowances for loans and other impairments (81) (63) -22.5% • Profit before associates contribution 1,649 1,837 11.3% Share of profits from associates 469 638 36.0% • Profit before tax 2,119 2,475 16.8% Profit after tax 1,597 2,024 26.7% HLB H1FY23 ended 31 December 2022 LO#6Net Interest Income & NIM NIM moderated due to intense deposit competition and SRR compliance Hong Leong Bank RM'mil 2.16% 2 bps 2.19% .......... 2.15% 2.18% 9 bps 2.14% 2.10% 2.09% y-o-y q-o-q 2,430 2,297 5.8% y-o-y 1,176 1,232 1,162 1,159 1,198 2.7% q-o-q Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Net interest income NIM H1FY23 H1FY22 Net interest income HLB H1FY23 ended 31 December 2022 NIM 6#7Hong Leong Bank Non-Interest Income Improved non-interest income ratio from higher card fees, trade finance activities, trading and FOREX gains 18.6% 16.5% 556 49 RM'mil 454 31 202 122 Credit Card Related Fees H1FY22 RM96 mil H1FY23 RM105 mil 10.1% 301 305 Fee income: of which Wealth Management Income H1FY22 RM105 mil H1FY23 RM90 mil 13.7% H1FY22 Islamic and others Fee Income H1FY23 Trading, Investment & Forex Non Interest Income ratio HLB H1FY23 ended 31 December 2022 7#8Operating Expense Effectively managing our expenses to maintain low CIR levels Domestic CIR 35.1% 34.2% 37.1% 36.4% RM'mil 1,087 1,020 150 119 69 103 263 269 569 565 H1FY22 Personnel cost Marketing CIR H1FY23 Establishment Admin & general Operating Expenses Admin & general 14% Marketing 9% H1FY23 Establishment 25% Hong Leong Bank Personnel cost 52% Improved CIR - opex managed at similar levels q-o-q 37.4% 38.4% 37.4% 36.0% 36.7% RM'mil 560 513 518 541 546 Q2FY22 Q3FY22 Q4FY22 Operating expenses Q1FY23 Q2FY23 CIR HLB H1FY23 ended 31 December 2022 8#9Loans/Financing Solid growth trajectory led by expansion in key portfolio segments Hong Leong Bank 7,259 (+6.8%) 2,430 (+5.7%) 2,427 (+24.4%) 7.6% RM'mil 172,281 y-o-y 160,063 Total Loans H1FY22 Retail Business & Corporate International Operations Total Loans H1FY23 Domestic Residential H1FY22 H1FY23 H1FY22 H1FY23 8.2% Business 10.1% Properties RM79.6 bil RM86.1 bil RM50.4 bil RM55.5 bil Singapore H1FY22 RM6.5 bil H1FY23 RM8.1 bil 25.6% Enterprises Transport Vehicle H1FY22 H1FY23 H1FY22 10.3% SME RM17.0 bil RM18.7 bil H1FY23 RM28.1 bil RM31.3 bil 11.1% Vietnam H1FY22 RM1.3 bil H1FY23 RM1.7 bil 31.9% Community Unsecured H1FY22 (CC+PL) RM5.1 bil H1FY23 RM5.4 bil H1FY22 5.1% SME Banking H1FY23 RM10.5 bil RM12.2 bil 15.9% Cambodia H1FY22 RM2.2 bil H1FY23 RM2.5 bil 15.8% HLB H1FY23 ended 31 December 2022 9#10Hong Leong Bank Asset Quality Maintaining solid asset quality with prudent stance remained Gross Impaired Loans/Financing (GIL) Loan/Financing Impairment Coverage (LIC) 1.80% .. 1.72% 1.62% 1.54% 1.43% 317% 282% 280% 247% 0.78% 212% 212% 210% 0.61% 0.46% ⚫0.49% 0.49% 188% RM'mil 142% 118% 113% 1,071 98% 99% 98% 890 820 838 85% 717 FY2019 FY2020 GIL FY2021 GIL ratio FY2022 ...Industry GIL Ratio H1FY23 FY2019 FY2020 FY2021 FY2022 LIC LIC (including security value) ..... HLB H1FY23 ended 31 December 2022 H1FY23 ⚫. Industry LIC 10#11Asset Quality Indicators remained healthy with no pressure on any particular segment Group Malaysia Overseas 0.48% 0.51% 0.51% 0.21% 0.12% 0.12% 806 813 707 FY21 FY22 H1FY23 Residential Properties Transport Vehicles 26 FY21 14 FY22 H1FY23 SME Hong Leong Bank 0.43% 0.35% 0.38% 1.25% 0.32% 1.10% 1.09% 0.20% 0.22% 376 340 315 267 274 287 72 35 40 FY21 FY22 H1FY23 FY21 FY22 H1FY23 FY21 FY22 H1FY23 GIL RM'mil GIL ratio % HLB H1FY23 ended 31 December 2022 11#12Deposit Healthy growth backed by solid individual deposit base RM'mil CASA Hong Leong Bank Fixed Deposits 5.5% y-o-y H1FY22 RM62.3 bil RM62.2 bil H1FY23 stable H1FY22 H1FY23 RM96.1 bil RM102.4 bil 6.5% 197,292 198,868 188,552 183,290 173,493 FY20 FY21 H1FY22 FY22 H1FY23 CASA Ratio 31.3% Individuals Business Enterprises H1FY22 Q1FY23 3.4% RM96.7 bil RM100.0 bil H1FY22 RM87.8 bil RM93.2 bil H1FY23 6.1% Individual Deposit Mix 50.3% Note: Deposit figures are based on group, but market share data is based on domestic only; Business enterprise deposits include FI HLB H1FY23 ended 31 December 2022 12#13Liquidity & Capital Prudent liquidity and capital positions Loan-to-Deposit Ratio (LDR) Capital Adequacy^ Hong Leong Bank 16.7% 16.1% 16.1% 88.6% ... ..87.6%. ..... 87.0% 86.4% 86.9% 15.7% 15.4% 14.5% 14.0% 14.0% 13.6% 13.3% 13.4% 84.4% 83.5% 83.9% 83.5% 85.0% 13.1% 12.7% 12.9% 13.0% FY2019 FY2020 FY2021 FY2022 H1FY23 ...... Industry LDR HLB LDR Note: Industry data derived from banking system's commercial banks plus Islamic banks only 130% 125% 85% 73% Liquidity Coverage Ratio (LCR) Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 CET1 Tier 1 Total Capital Ratio Net Stable Funding Ratio (NSFR) Loan to Funds Ratio (LTF) Loan to Funds & Equity Ratio (LTFE) Note: Capital base & ratio after proposed dividends HLB H1FY23 ended 31 December 2022 13#14Hong Leong Bank Shareholder Value Continuously focus on strategic priorities as enablers to deliver sustainable returns to our shareholders Return on Equity & Return on Assets Net Assets & Earnings Per Share 161 140 12.8% 10.9% 10.7% 10.1% 78 88 99 15.7 15.1 14.7 14.4 1.56% 1.34% 1.33% 1.25% FY2021 FY2022 H1FY22 H1FY23 ROE ROA FY2021 FY2022 H1FY22 H1FY23 NAV/share (RM) EPS (sen) HLB H1FY23 ended 31 December 2022 14#15Agenda 2 Closing Remarks Hong Leong Bank HLB H1FY23 ended 31 December 2022 15#16Sustainability Initiatives - H1FY23 Target: RM4b Renewable Energy Approved (RM2.7b) by FY2025 68% Target: RM0.5b by FY2023 Green Auto (RM743m) > target 1) Global ESG Indices and Assessment: Dow Jones Sustainability Indexes 2022 Score: 52 out of 100 (vs industry average 28) 87th percentile within the banking industry 2) CCPT Business Banking Exposure H1FY23 Key Highlights 3) ESG Awards & Recognition: The Edge ESG Awards 2022 Gold in financial services sector - The Asset Triple A Awards Best Green Bond in Malaysia - Hong Leong Bank Green & Affordable Mortgages (RM11.4b) Target: RM12b by FY2023 95% - planted 5) Mangrove Rehabilitation more than 41k trees; continuously explore to expand the initiative C1, C2 and C3 89% 4) Green Bond Portfolio (RM1.3b as at Dec-22): Dec-22 RM45 bil 6) TCFD - C4 and C5 11% LSSPV O/S: RM141m <75g CO2/km 7) Working O/S: RM395m providers on On track to meet target of 50,000 trees by H1 2023 on track to meet basic recommendations within the stipulated time frame of 24 months with external service physical risk C4-C5 customers will be constantly engaged for appropriate measures to transition over the coming years Platinum O/S: RM793m + Gold assessment for portfolio our assets and HLB H1FY23 ended 31 December 2022 16#17Hong Leong Bank Closing Remarks Strong business performance against a challenging backdrop underpinned by our core values and strategic priorities ■ Solid topline predominantly driven by robust loan/financing expansion and higher non-interest income. ■ Record quarterly PAT, breaking the RM1 billion mark for the first time. ■ Effective expenses management as we continue to deliver positive low CIR levels. ■ Asset quality is healthy whilst maintaining a stable GIL ratio. ■ Prudent liquidity and robust capital positions as key enablers to support customers' ongoing financing needs and business growth. ■ Robust profit contribution from BOCD; remained vigilant in navigating the ongoing challenges in China reopening. ■ Focused on the continued growth of underlying business as the key driver to achieving a set of commendable results whilst we navigate through the current challenging operating environment and ongoing macroeconomic headwinds. HLB H1FY23 ended 31 December 2022 17#18Agenda 3 Supplementary Information Hong Leong Bank HLB H1FY23 ended 31 December 2022 18#19Group Performance Hong Leong Bank Change Change Change RM'mil H1FY22 H1FY23 Q2FY23 (YoY) (YoY) (QoQ) Net interest income 2,297 2,430 5.8% 1,198 1.9% -2.7% Non-interest income 454 556 22.4% 288 47.5% 7.4% Total income 2,751 2,986 8.5% 1,486 8.4% -0.9% Operating expenses (1,020) (1,087) 6.5% 546 6.5% 1.0% Operating profit before allowances 1,731 1,900 9.7% 940 9.6% -2.0% Allowances for loans and other impairments (81) (63) -22.5% (26) -21.3% -30.5% Share of profits from associate 469 638 36.0% 373 48.5% 40.8% Profit before tax 2,119 2,475 16.8% 1,287 19.6% 8.4% Profit after tax 1,597 2,024 26.7% 1,042 41.1% 6.2% HLB H1FY23 ended 31 December 2022 19#20HLISB - Key financial highlights Opex & CIR • Total Net Income Stronger performance led by robust financing growth, lower financing impairment allowance and effective funding cost management 469 RM'mil 54% 305 H1FY22 H1FY23 Gross Financing • Solid growth in financing supported by retail business and SME RM'bil 38.4 13% 34.0 • Positive JAWS attained with commendable CIR 28.3% 26.0% Hong Leong Bank • Profit after Tax and Zakat Improved profitability underpinned by strong fundamentals and commendable business performance 249 RM'mil RM'mil 107% 137 125 10% 120 H1FY22 H1FY23 Deposits • Growth contributed from expansion in both retail and business deposits with healthy CASA growth 41.9 RM'bil 38.2 10% H1FY22 H1FY23 H1FY22 H1FY23 H1FY22 H1FY23 Capital Adequacy • Total capital position remained healthy 15.2% 14.5% H1FY22 H1FY23 20 20 HLB H1FY23 ended 31 December 2022#21Hong Leong Bank Disclaimer This presentation has been prepared by Hong Leong Bank ("HLB") for selected recipients for information purposes only and the information contained herein has been obtained from sources believed to be reliable. The information contained herein is believed to be correct as of the date of this presentation and is given in summary form and does not purport to be complete. HLB does not make any guarantee, representation or warranty, whether expressed or implied, as to the adequacy, accuracy or completeness or reliability of any such information, opinion or estimate contained and shall not be responsible or liable for any consequences of any reliance thereon by any recipient. Opinions and estimates constitute the judgment of HLB as of the date of this presentation and are subject to change without notice. HLB does not act as any recipient's financial advisor or agent and the information contained herein is not intended to be relied upon as advice to any recipient and should not be construed as an offer or recommendation to buy or sell securities. This presentation does not purport to contain all the information that a prospective investor may require and the information contained herein does not take into account the specific investment objectives, financial situation or particular needs of every recipient hence it may not be appropriate for all persons. Each recipient is responsible to make his or her own independent assessment of the information provided herein and should not treat the information provided as advice relating to investment or related matters. Each recipient should consult his or her own advisers and must make his or her own independent decision regarding any investment. Certain statements contained in this presentation may be statements of future expectations and involve known and unknown risks and uncertainties. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. HLB does not have any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Each recipient should not place undue reliance on forward-looking statements, which is believed to be correct only as of the date of this presentation. The information contained in this presentation is strictly confidential and its contents, views or opinions may not be reproduced, redistributed, transmitted or passed on, directly or indirectly, to any other person or published electronically or via print, in whole or in part, for any purpose. The intellectual property in the presentation belong to HLB unless specifically indicated otherwise. For further information, please visit www.hlb.com.my or contact: Investor Relations: Chow Sheng Wai Head, Corporate Finance & Investor Relations DID: +603 2081 2972 Email: [email protected] THANKYOU HLB H1FY23 ended 31 December 2022 21