RHB eyes record year in 2018
Results will be driven by growth in various business segments
KUALA LUMPUR: RHB Bank Bhd, the country’s fourth-largest bank by asset size, is hoping to achieve a record year for financial year 2018 (FY18), driven by growth in its various business segments.
“We hope to achieve this, barring any unforseen circumstances. RHB should be able to record a full-year record profit as well.
“We expect our topline to continue growing from net funding income as well as fee-based income,” managing director Datuk Khairussaleh Ramli said at a briefing.
“We see credit costs to be fairly benign at about the present level. In simple layman terms, if we can replicate what we did in the first half in the second half, that will imply a full year of record profits for us,” he added.
In the first half of the year, RHB posted a record net profit of RM1.16bil or an increase of 16% compared to the same period in the previous year, mainly due to higher net fund-based and non-fund-based income as well as lower allowances for credit losses.
The bank said it aimed to achieve this record target in spite of a cut in its loan growth target for this year.
“We have a loan growth target of 6% for this year but so far, we only grew about 1%, so it is quite likely we will not be able to meet this target of 6%.
“So, we are looking at a potential loan growth of between 3% and 4%, which is still possible,” Khairussaleh said.
He noted that its targeted return on equity remained unchanged to “exceed 10%”, while the targeted cost-to-income ratio is “below 50%”.
The biggest driver in its loan growth in the year-to-date (YTD) period until June 2018 came from the mortgage segment.
In the YTD period, RHB’s retail banking was supported by its mortgage segment that grew 7.6% to RM50.5bil from the end of last year. The unsecured business portfolio also grew 7.6% to RM8.53bil from the end of the previous year.
In the bigger picture, loans grew by 0.8% until June 30, 2018 to RM161.4bil compared to RM160.1bil in Dec 31, 2017.
“Growth was primarily seen in mortgages, followed by retail small and medium enterprises, and personal financing.
“When we compare the first half of 2018 to the first half of 2017, we saw a 16.4% growth in mortgages and a 20.1% growth in unsecured business lending (personal loans),” he said.
He said mortgages had been growing at a healthy pace for a few recent quarters and demand was seen in properties that were below the RM1mil threshold.
“Indeed, we are also seeing more sales from the RM1mil and below segment (80%). For this year, some 40% came from residential properties that are priced below RM500,000.
“Demand for properties is evident for properties that are priced below RM1mil,” Khairussaleh said.
The bank recorded a 13.8% yearon-year rise in net profit to RM570.26mil in the second quarter to end-June, while revenue for the quarter was marginally higher at RM2.65bil against RM2.62bil in the same quarter last year.
RHB said in a statement that the better performance was mainly due to higher net fund-based and nonfund-based income and lower allowances for credit losses on other assets.
It has declared an interim dividend of 7.5 sen per share or a 25.9% payout ratio of its net profit thus far in its first-half period.
Earnings per share for the quarter grew to 14.20 sen from 12.50 sen previously, while net assets per share dropped slightly to RM5.61 from RM5.77 at the end of FY17.
When compared against the previous quarter, the bank said net profit showed a decrease of 3.5% from the RM590.8mil recorded in the preceding quarter ended March 31, 2018.
“This was due to lower non-fundbased income, in particular from the absence of one-off gains recorded in the preceding quarter and lower mark-to-market gains on securities and derivatives,” it said.