RHB Bank nine-month earn­ings rise to RM1.49bil

Bank achieves con­sec­u­tive quar­ters of prof­its amid mod­er­ate loan growth

The Star Malaysia - StarBiz - - News - By TEE LIN SAY lin­say@thes­tar.com.my

PETALING JAYA: RHB Bank Bhd’s nine-month net profit to Sept 30 im­proved 4.9% to RM1.49bil on the back of a 1.78% de­cline in rev­enue to RM7.87bil, mainly due to lower im­pair­ment losses on other as­sets and higher net fund­ing in­come, par­tially off­set by lower non-fund-based in­come, higher over­heads and higher loan loss im­pair­ment.

For the third quar­ter to Sept 30, RHB’s net profit dropped 3.27% to RM488.83mil on the back of a 1.23% drop in rev­enue to RM2.62bil due to al­lowances for im­pair­ments and higher op­er­at­ing ex­penses.

This is the third quar­ter RHB has de­clared im­pair­ment costs. Thus, earn­ings per share also dropped to 12.2 sen from 12.6 sen pre­vi­ously. No div­i­dends were de­clared. As of the pe­riod, RHB had a net tan­gi­ble as­set per share of RM5.74.

In a state­ment to Bursa Malaysia, RHB said that al­lowances for im­pair­ment on loans and fi­nanc­ing were higher at RM312.6mil, pri­mar­ily due to a higher col­lec­tive im­pair­ment, par­tially off­set by lower in­di­vid­ual im­pair­ment. This was for the nine-month pe­riod.

Im­pair­ment losses on other as­sets for the last two years were pri­mar­ily pro­vided for cor­po­rate bonds in Sin­ga­pore, re­flect­ing mar­ket devel­op­ments in the oil and gas in­dus­try, it said.

RHB said that com­pared to De­cem­ber 2016, gross im­paired loans de­clined slightly to RM3.6bil, with the gross im­paired loans ra­tio im­prov­ing to 2.31% from 2.43%.

“We con­tinue to achieve con­sec­u­tive quar­ters of sus­tained prof­itabil­ity amid the do­mes­tic mar­ket’s mod­er­ate loan growth and con­tin­u­ing global uncer­tain­ties.

“Com­bined with our abil­ity to man­age fund­ing cost, our net in­ter­est mar­gin has been hold­ing up over the last three quar­ters,” said group manag­ing di­rec­tor of RHB Bank­ing Group Datuk Khairus­saleh Ramli.

“Notwith­stand­ing the chal­lenges in as­set qual­ity, our earn­ings and per­for­mance demon­strated our abil­ity to cap­ture op­por­tu­ni­ties across our busi­nesses and ef­fec­tively keep a firm grip on costs.

“As we move to­wards the close of the year, we see a stronger pipe­line for our core busi­nesses, whilst our bal­ance sheet, liq­uid­ity and cap­i­tal re­main strong,” he said.

Over the nine-month pe­riod, net fund-based in­come in­creased by 5.2% to RM34­bil from a year ago mainly due to loan growth and lower in­ter­est ex­pense from pru­dent fund­ing cost man­age­ment and re­demp­tion of sub-debts and se­nior notes in the sec­ond quar­ter of the pe­riod.

“This has re­sulted in net in­ter­est mar­gin sta­bil­is­ing at 2.19% over the last two quar­ters,” said RHB.

Mean­while, non-fund-based in­come was 10.9% lower at RM1.32bil, con­trib­uted largely by a lower net for­eign-ex­change gain, lower com­mer­cial and in­vest­ment bank­ing fee in­come, lower trad­ing and in­vest­ment in­come and lower in­sur­ance un­der­writ­ing sur­plus.

This was par­tially off­set by an in­crease in net wealth man­age­ment fee in­come and higher bro- ker­age in­come in line with bet­ter trad­ing vol­umes.

None­the­less, op­er­at­ing ex­penses rose by 2% to RM2.34bil from a year ago, driven by a rise in per­son­nel costs and higher IT-re­lated ex­penses as the group con­tin­ued to in­vest in tech­nol­ogy in­fra­struc­ture and ca­pa­bil­i­ties.

This was off­set by a de­cline in of­fice rental and re­lated premises main­te­nance cost. The group’s dis­ci­plined cost-man­age­ment ef­forts de­liv­ered an im­proved cost-to-in­come ra­tio of 49.6% from 50% for fi­nan­cial year 2016.

To­tal as­sets de­creased by 0.7% to RM235.1bil as at Sept 30 pri­mar­ily due to lower fi­nan­cial in­vest­ments in the held-to-ma­tu­rity port­fo­lio and de­riv­a­tive as­sets, par­tially off­set by growth in loans and fi­nanc­ing and cash and short-term funds.

Share­hold­ers’ funds for the group in­creased to RM23­bil, with net as­sets per share im­prov­ing by 5.9% to RM5.74 as at Sept 30.

The com­mon eq­uity tier-1 and to­tal cap­i­tal ra­tio of the group re­mained strong at 13.6% and 17.9%, re­spec­tively.

“These cap­i­tal ra­tios are well above the Basel III min­i­mum tran­si­tional ar­range­ment re­quire­ments of 5.75% and 9.25%, re­spec­tively, po­si­tion­ing the group as one of the best cap­i­talised bank­ing groups in Malaysia,” said RHB.

Mean­while, the group’s gross loans and fi­nanc­ing grew by 3.3% year-on-year (y-o-y) and 2.3% for the first nine months to RM158­bil.

The in­creases were mainly from mort­gages and the SME seg­ment, which recorded a re­silient an­nu­alised growth rate of 12.3% and 4.3%, re­spec­tively.

RHB said that cus­tomer de­posits in­creased by 1.7% for both y-o-y and the first nine months to RM168.5bil.

To­tal cur­rent and sav­ings ac­count (CASA) reg­is­tered a strong growth of 11.9% over the year and 7.4% year-to-date, with the CASA com­po­si­tion im­prov­ing to 27.1% as at Sept 30 from the 25.6% recorded in De­cem­ber 2016.

The group’s loan-to-de­posit ra­tio stood at 93.8%, whereas the liq­uid­ity cov­er­age ra­tio and net sta­ble fund­ing ra­tio were above the reg­u­la­tory re­quire­ment as at Septem­ber 2017.

Com­pared to De­cem­ber 2016, gross im­paired loans de­clined slightly to RM3.6bil, with the gross im­paired loans ra­tio im­prov­ing to 2.31% from 2.43%.

Grow­ing stronger: Khairus­saleh says the bank sees a stronger pipe­line for its core busi­nesses, while its bal­ance sheet, liq­uid­ity and cap­i­tal re­main strong.

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