RHB performs relatively well for first 9 months

RHB Bank Berhad announced a relatively well financial result following a stronger performance in the third quarter today.

Its financial results for the first nine months ended 30 September 2017 showed a net profit of RM1,490 million as compared to RM1,420 million for the same period in 2016. This is an increase of 4.9% year on year (yoy). The yoy earnings improvement was mainly due to lower impairment losses on other assets.

KEY HIGHLIGHTS

• Pre-tax profit of RM2.0 billion, up by 3.6%
• Cost-to-income ratio at 49.6%
• Gross loans of RM158.0 billion, up by 3.3%
• Customer deposits of RM168.5 billion, up by 1.7%
• Current and savings account balances up by 11.9%, CASA composition at 27.1%
• Islamic Banking contributes 28.6% of total domestic loan and financing
• Mortgages and SME continued growth momentum

CONSUMER BANK SEE SLIGHT DIP

Both the retail banking and the business banking businesses of RHB see a slight dip in the first nine months for this year.

Group Retail Banking reported a pre-tax profit of RM799.5 million for the first nine months ended 30 September 2017, which is 3.2% lower from the previous year’s corresponding period. This was mainly attributed to lower net fund based income as yield competition intensified, partially offset by lower allowances for loans and financing.

While RHB's Group Business Banking recorded a pre-tax profit of RM277.2 million in the first nine

months, a decrease of 15.9% mainly due to higher allowances for loans and financing and higher operating expenses. Net funding income and non-funding income remained relatively stable over the period.

WHOLESALE BANKING SEE DOUBLE DIGIT GROWTH, IN BOTH DIRECTIONS

Group Corporate and Investment Banking registered pre-tax profit of RM412.5 million, a 21.9% decline on the back of lower net funding income and non-fund based income and higher loan loss impairment. Meanwhile, Group Treasury and Global Markets recorded a strong 23.1% growth in pre-tax profit to RM864.7 million in the first nine months, mainly due to higher net funding income and higher impairment write-back on loans, partially offset by lower net foreign exchange gain.

SILVER LINING CAN BE FOUND IN THE BALANCE SHEET?

While business lines show a relative growth in some areas, the strongest performance in the financial results lie in the group's balance sheet.

As at 30 September 2017, the common equity tier-1 (“CET-1”) and total capital ratio of the Group, taking into consideration the FY2017 interim dividend, remained strong at 13.6% and 17.9% respectively. These capital ratios are well above the Basel III minimum transitional arrangement requirements of 5.75% and 9.25% respectively.

The group says that this positions RHB as "one of the best capitalised banking groups in Malaysia".

OUTLOOK

Datuk Khairussaleh Ramli, RHB'S Group Managing Director says that they "continue to achieve consecutive quarters of sustained profitability amidst the domestic market moderate loans growth".

He also reassured investors against possible business headwinds, adding that "notwithstanding the challenges in asset quality, our earnings and performance demonstrated our ability to capture opportunities across our businesses and effectively keep a firm grip on costs".