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RHB Bank records first half 2019 net profit growth of 7.3% to RM1.25 billion

Key highlights:

  • Total income grew 3.9% Y-o-Y to RM3,519.0 million
  • Pre-tax profit rose 6.4% Y-o-Y to RM1,664.7 million
  • Operating expenses increased by 2.7%, cost-to-income ratio further improved to 48.5% from 49.1% a year ago
  • Allowances for credit losses lower by 8.1% Y-o-Y
  • Gross loans up 6.9% Y-o-Y to RM172.3 billion while domestic loans grew 6.6% Y-o-Y supported by resilient growth in mortgages and SME 
  • Customer deposits increased 10.9% Y-o-Y to RM185.0 billion; CASA stood at 26.6% of total deposits
  • Islamic financing grew 22.2% from a year ago and contributes 36.0% of total domestic loans and financing 
  • ROE at 10.4%
  • Declared an interim dividend of 12.5 sen per share, a 40.2% payout ratio

RHB Bank Berhad (the Group) announced today its financial results for the half year ended 30 June 2019.

  • The Group reported a net profit of RM1,245.6 million, up 7.3% year-on-year (Y-o-Y) mainly due to higher non-fund based income and lower expected credit losses (ECL) on loans, coupled with effective cost management.
  • Gross fund based income increased by 7.4% Y-o-Y on the back of a 6.9% increase in gross loans and financing, marginally negated by the impact of an OPR cut in May 2019. Funding and interest expense rose 16.4% Y-o-Y due to the impact from the OPR hike in January 2018 coupled with higher deposit base. As a result, net fund based income declined by 2.6% Y-o-Y.
  • Non-fund based income improved significantly by 21.8% Y-o-Y to RM1,103.5 million, contributed largely by higher net trading and investment income, insurance underwriting surplus and higher capital market related fee income.
  • Operating expenses rose by 2.7% to RM1,707.6 million from a year ago from higher personnel cost, IT-related expenses and marketing expenses. Cost-to-income (CIR) ratio improved to 48.5% from 49.1% a year ago.
  • Allowances for credit losses was RM146.8 million, 8.1% lower than the previous year, primarily due to lower ECL on loans. Annualised credit charge ratio improved to 0.20% compared with 0.22% over the same period a year ago.

Second Quarter 2019 Earnings Against Second Quarter 2018

  • On a quarter Y-o-Y basis, net profit for the current quarter was at RM615.4 million, an increase of 7.9% from RM570.3 million recorded in the same quarter last year. This was attributable mainly to higher non-fund based income and lower ECL on loans. 

Balance Sheet & Capital Position Remained Robust

  • Total assets of the Group increased by 4.3% from December 2018 to RM253.5 billion as at 30 June 2019. Shareholders’ equity stood at RM24.9 billion, with net assets per share at RM6.20.
  • RHB’s capital position remains strong; Common equity tier-1 (CET-1) and total capital ratio of the Group after taking into account the FY2019 interim dividend stood at 16.32% and 19.38% respectively.
  • The Group’s gross loans and financing grew by 6.9% Y-o-Y to RM172.3 billion, supported mainly by resilient growth in mortgages, SME and Singapore. The Group’s domestic loan market share stood at 9.0% as at end-June 2019. 
  • Customer deposits recorded a 10.9% Y-o-Y growth to RM185.0 billion as at 30 June 2019, contributing to a healthy liquidity coverage ratio (LCR) of 149.2%.
  • Total current and savings account (CASA) increased by 2.2% over the same period, with CASA making up 26.6% of total deposits.
  • Gross impaired loans ratio improved to 2.15% from 2.33% a year ago with gross impaired loans at RM3.7 billion as at 30 June 2019.
  • RHB to continue to be prudent in loan loss provision with loan loss coverage standing at 106.1% as at 30 June 2019.

Performance Review of Key Business Units

  • Retail Banking
    • Retail Banking reported a pre-tax profit of RM501.4 million for the first six months ended 30 June 2019, 0.9% higher than the previous year on the back of higher net fund based income. 
    • Retail loans and financing rose 9.1% Y-o-Y to RM87.8 billion as at 30 June 2019, driven mainly by growth in mortgages and personal financing. 
    • Retail deposits increased by 14.3% Y-o-Y to RM57.3 billion, largely contributed by higher fixed deposits.
  • Group Business Banking
    • Group Business Banking recorded a pre-tax profit of RM257.0 million for the six months of 2019, 64.7% higher Y-o-Y from higher net fund based income and higher write back of ECL on loans.
    • Gross loans and financing expanded by 4.5% Y-o-Y to RM25.7 billion, coming mainly from the Retail SME portfolio.
    • Customer deposits recorded a strong Y-o-Y growth of 16.7% to RM27.4 billion primarily from higher fixed deposits.
  • Group Wholesale Banking
    • recorded a pre-tax profit of RM972.8 million, where Group Corporate and Investment Banking registered a pre-tax profit of RM315.7 million and Group Treasury and Global Markets registered a pre-tax profit of RM657.1 million.
  • RHB Bank Singapore 
    • recorded a pre-tax profit of SGD6.3 million for the period, while loans and advances increased 7.6% Y-o-Y to SGD4.0 billion and deposits grew by 11.7% Y-o-Y to SGD4.9 billion.
  • Group International Business
    • excluding Singapore registered a pre-tax profit of RM44.9 million.
  • RHB Group’s Islamic Business
    • recorded 30.7% Y-o-Y growth in pre-tax profit to RM359.2 million mainly due to lower ECL on financing and higher net fund based income. 
    • Gross financing continued to record robust growth at 22.2% Y-o-Y to RM56.1 billion.
    • Islamic financing constitutes 36.0% of the Group’s total domestic gross loans and financing, up from 31.4% as at 30 June 2018.

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