RHB Bank Q3 net profit slightly higher, year-to-date earnings down 14.4%

PETALING JAYA: RHB Bank Bhd’s net profit for the third quarter ended Sept 30, 2020 rose 1% to RM622.25 million from RM615.83 million a year ago mainly due to higher non-fund based income, but revenue fell 9.8% to RM3.01 billion from RM3.34 billion.

For the nine month period, the group recorded a net profit of RM1.59 billion, a decrease of 14.4% from RM1.86 billion in the corresponding period last year mainly due to net modification loss of RM392.4 million arising from the moratorium given to customers and higher allowances for credit losses. Revenue also dropped 5.9% to RM9.51 billion from RM10.10 billion.

Higher net fund based income and non-fund based income helped to mitigate the profit reduction. Net fund based income increased by 1.7% year-on-year to RM3.74 billion driven by proactive management of funding costs. Net interest margin for the quarter dropped to 1.99% compared with 2.13% for the same period last year mainly from the impact of OPR cuts.

Non-fund based income improved by 14.3% to RM1.77 billion, contributed largely by higher net trading and investment income, brokerage income and insurance underwriting surplus.

The group remained prudent and continued to build up provisions to absorb any potential negative effects to asset quality. As a result, allowances for credit losses on loans, advances and financing increased to RM525.9 million, up from RM238.8 million for the corresponding period last year.

Total assets for the group increased by 2.1% from December 2019 to RM263 billion as at Sept 30, 2020, primarily due to an increase in loans, advances and financing and securities portfolios. Net assets per share was at RM6.81, with shareholders’ equity at RM27.3 billion as at Sept 30, 2020.

The Common Equity Tier-1 (CET1) and total capital ratio of the group stood at 16.42% and 18.25% respectively.

The group’s gross loans and financing grew by 5.6% year-on-year to RM182.4 billion, mainly supported by growth in mortgages, SME and Singapore. Domestic loans and financing grew 4.7% year-on-year. The group’s domestic loan market share stood at 9% as at endSeptember 2020.

Gross impaired loans was RM3.1 billion as at Sept 30, 2020, with a gross impaired loans ratio of 1.69% compared with RM3.5 billion and 1.97% as at Dec 31, 2019. Loan loss coverage ratio for the group, excluding regulatory reserves, stood at 108.3% as at end-September 2020.