RHB eyes higher loan growth
Lender expects better operating environment this year
ganeshwaran@thestar.com.my
KUALA LUMPUR: RHB Banking Group (RHB) is projecting higher gross loan and financing growth of 5% this year compared with the 2% registered in the previous financial year.
RHB group managing director Datuk Khairussaleh Ramli said the target was in line with the expectation of a better operating environment moving forward.
“For the year ended Dec 31, 2016 (FY16), gross loan grew by 2% to RM154.5bil. The increase came mainly from mortgages and small and medium enterprises (SME), negated by a decline in corporate loan which is in line with our strategy to rebalance the group’s loan composition.
“This year, we expect an improved gross loan and financing growth. Overall, the group expects its performance for financial year 2017 to be better than the previous financial year,” said Khairussaleh.
Mortgages and SME loan and financing growth in FY16 were 13.3% and 11.3% respectively, which more than offset the 4.6% contraction in corporate loan portfolios. RHB planned to rebalance its portfolio by focusing more on improving its retail and business loan segments and reducing its emphasis in corporate loans.
Over the years, corporate loan share of RHB’s total loan volume has reduced significantly. In 2016, only 29% of RHB’s total loan was corporate loan, compared with 33% in 2014. By 2020, RHB planned to reduce it to 25%.
Khairussaleh was cautiously optimistic that its gross impaired loan (GIL) ratio would improve in the current financial year. In FY16, GIL stood at 2.43%, slightly higher than the 1.88% registered a year earlier.
In a filing with Bursa Malaysia yesterday, RHB Bank Bhd announced that its net profit for FY16 rose marginally by 1% yearon-year to RM1.68bil, despite a commendable growth of 21.6% in operating profit before allowances.
The strong growth of operating profit before allowances was offset by loan impairment and impairment loss on other assets.
RHB Bank’s allowances for impairment on loan and financing increased significantly by 73.3% to RM595.2mil, mainly due to higher individual allowances for loan impairment on certain corporate accounts relating to oil and gas. There were also pre-emptive provisions for steel related exposure coupled with write-backs on mortgage portfolios in 2015.
Total impairment losses on other assets were higher at RM268.2mil, primarily attributed to the full-impairment made in the second quarter of FY16 for a RM253.5mil-worth corporate bond in Singapore.
Its net profit in the last quarter of FY16 also fell significantly by 28.1% to RM261.24mil compared with RM363.37mil registered a year earlier.
On its revenue in FY16, RHB Bank saw a slight fall of 1.9% to RM10.57bil. As for the fourth quarter of FY16, the revenue fell by 9.3% to RM2.56bil.
A final single-tier cash dividend of seven sen per share has been declared in the fourth quarter of FY16.
RHB Bank’s cost-to-income ratio improved to 50% in 2016, in contract to 53.8% a year before.
“We are trying to reduce the cost-to-income ratio further through many avenues, one of them being the rationalisation of RHB investment bank branches nationwide,” said Khairussaleh.
As of Dec 31, 2016, RHB Bank’s total capital ratio after the proposed final dividend stood at 17.2%. Its common equity tier-1 ratio was 13.1%.
“These capital ratios are well above the Basel III minimum transitional arrangement requirements, positioning the group as one of the best capitalised banking groups in Malaysia,” said Khairussaleh. He added that RHB Bank’s customer deposits increased by 4.8% to RM165.8bil.