KUALA LUMPUR: RHB Bank Bhd remains confident of its outlook despite a challenging economic landscape due to stronger capitalisation, leaner organisation and greater efficiency.
“The group is expected to deliver a better performance this year and is on the right trajectory to achieve its long-term objectives,” said RHB Bank in a statement on its second- quarter results yesterday.
RHB Bank’s net profit fell to RM350.17 million in the quarter ended June 30 from RM559.03 million previously, due to a corporate bond impairment amounting to more than RM250 million in Singapore.
Group revenue was, however, higher at RM2.69 billion compared with RM2.65 billion a year ago.
RHB Bank’s total income increased by five per cent to RM3.2 billion, supported by solid net interest and eight per cent growth in fund-based income to RM2.2 billion, on the back of 4.8 per cent growth in loan and financing assets.
The bank’s net interest margin was lower by three basis points to 2.2 per cent while non-fund based income remained stable at RM1.03 billion.
At a press conference, managing director Datuk Khairussaleh Ramli said the rest of this year would continue to be challenging as global macro-economic uncertainties will not spare Malaysia from headwinds.
“External demand risks and softer consumer sentiments are likely to moderate Malaysia’s economic growth to four per cent this year from five per cent last year. The local banking sector growth remains modest as corporate and household loans consolidate.
“Softer financial and capital markets, and rising pressure on liquidity and asset quality will also weigh on banks’ performance.”
He said RHB Bank’s operating expenses were 4.2 per cent lower than a year ago and cost-to-income ratio improved to 49.5 per cent from 54.2 per cent previously.
While loans and markets-related fee income were lower, wealth management fee income expanded by 24.6 per cent year-on-year.
Total impairment losses on other assets was at RM251.6 million as full impairment was made for the corporate bond in Singapore.
RHB Bank declared a five sen per share interim dividend totalling RM200.5 million, for a dividend payout ratio of 22 per cent.
Khairussaleh said the bank’s RM915.1 million net profit in the first half of this year fell 15 per cent from RM1.07 billion a year ago.
This was primarily due to a one-off RM253.5 million full corporate bond impairment in Singapore against a write-back for mortgage portfolio collective allowances totalling RM131.4 million last year.
Excluding these two items, RHB Bank’s operating profit before allowances increased by 16 per cent to RM1.62 billion in the first half of this year. The was underpinned by strong net fund-based income growth and effective cost management.
Last month, Bank Negara Malaysia cut the overnight policy rate (OPR) by 25 basis points to stimulate domestic consumption.
Asked if RHB Bank anticipates further OPR cuts, Khairussaleh said: “We don’t think so. We see a gradual growth recovery in the following quarters supported by stronger domestic demand in consumer spending and infrastructure projects.”
Earlier this month, the Indonesia Financial Services Authority, or Otoritas Jasa Keuangan, and Bank Negara signed a bilateral agreement under the Asean Banking Integration Framework.
Malayan Banking Bhd and CIMB Group Holdings Bhd are operating in Indonesia via units PT Bank Maybank Indonesia Tbk and PT Bank CIMB Niaga Tbk.
Asked if RHB Bank is likely to be the third Malaysian bank to seize the privilege accorded by the bilateral agreement, Khairussaleh said: “If the right opportunity comes to establish a commercial presence there, we are keen. It has to be a good fit and at the right valuation.”
On whether RHB Bank is in talks with a potential Indonesian banking partner, Khairussaleh said: “There’s nothing on the table for now.”