KUALA LUMPUR: RHB Bank Bhd expects no more cut in the Overnight Policy Rate (OPR) this year, given the gradual and phased re-opening of various economic sectors.
Group managing director Datuk Khairussaleh Ramli said if there was any, it would largely depend on the trajectory of the economic recovery.
"In our economic forecast, our call is that in the third quarter the gross domestic product (GDP) year-on-year will contract by a much smaller number. We also expect by the fourth quarter there will be some positive GDP growth, albeit marginal.
"Even in certain segments of our businesses, especially in the retail part, we do see an improvement in terms of applications coming in, and we believe that it has also been contributed by the government incentives in the home ownership fund as well as (incentives) for the purchase of auto vehicles," Khairussaleh said during the virtual press conference on RHB's interim results today.
He said RHB 's net fund based income would be affected if there were further OPR cuts this year.
"We are expecting a decline in its net interest margin (NIM) to 1.96 per cent from 2.12 per cent in financial year 2019 (FY19) excluding additional rate cuts, if any," he said.
For the second quarter ended June 30, 2020, RHB's net profit dropped 34.9 per cent to RM400 million from RM615.41 million before.,
This was mainly due to the one-off net modification loss of RM392.4 million and higher allowances for credit losses on loans, advances and financing.
Its revenue declined to RM3.2 billion versus RM3.41 billion previously.
For the half-year, net profit stood at RM971 million compared to RM1.2 billion previously, while revenue was lower at RM6.5 billion versus RM6.76 billion before.
It did not declare an interim dividend.
Khairussaleh said the group was not spared from the effects of the pandemic.
It remains committed to assisting its customers by absorbing the net modification loss arising from the implementation of the loan moratorium in the first half of 2020.
"Against the backdrop of a sharp economic contraction, we also continue to exercise prudence by building up provisions in anticipation of a potential weakening of asset quality.
"Nevertheless, RHB's healthy liquidity position and strong capital base will help us cushion the adverse impact caused by the pandemic," he said.
With the blanket moratorium ending in September, RHB is ramping up efforts in reaching out to its customers who require financial or repayment assistance.
Khairussaleh expects industry loans to grow 3.5 per cent this year as recovery momentum picks up since the economy reopened on June 10.
"A challenging environment, but we continue to show resilience in revenue growth, expense control and robust risk management in the first half of 2020.
"We are confident that we will be able to navigate the group through these unprecedented economic challenges," he said.
Meanwhile, RHB said its capital position remains strong, with Common Equity Tier-1 and total capital ratio standing at 16.59 per cent and 18.55 per cent respectively.
"RHB's gross loans and financing grew by 4.9 per cent year-on-year to RM180.8 billion, mainly supported by growth in mortgages, SMEs and Singapore.
Domestic loans and financing grew by 3.4 per cent year-on-year.
The group's domestic loan market share stood at 9.0 per cent as at end-June 2020.