KUALA LUMPUR: RHB Bank Bhd plans to execute its three-year TWP24 strategy by focusing on quality growth, boosting service excellence as well as efficiency in the near term.
Under the strategy, RHB has set several key targets which include a return on equity (ROE) of 11.5% and cost to income ratio of less than 44.5% by 2024.
For the financial year ended Dec 31, 2022 (FY22), RHB’s net profit increased by 3.4% year-on-year (y-o-y) to RM2.7bil from RM2.6bil in FY21, underpinned by higher net fund-based and non fund-based income, absence of modification loss and lower expected credit losses (ECLs).
Revenue was up by 13% y-o-y to RM13.28bil from RM11.75bil previously.
Net fund-based income rose by 8.6% y-o-y in FY22 to RM6.4bil on the back of higher gross fund based income.
Meanwhile, non-fund based income dropped by 10.6% y-o-y to RM1.9bil in the same period due to lower fee income, insurance underwriting surplus, as well as net trading and investment income. This was offset by better net gain on forex and derivatives.
With an ROE of 9.7% in FY22 from 9.6% in FY21, RHB’s capital position remained strong. Its Common Equity Tier-1 and total capital ratio stood at 16.9% and 19.3% respectively.
RHB group managing director and chief executive officer Mohd Rashid Mohamad said the group had demonstrated resilience and delivered commendable performance for FY22.
“Our growth momentum and fundamentals remain strong as reflected by our strong capital and liquidity positions.
“Our gross fund based income has increased over the years. Better cost management has also contributed to better ROE for 2022. On a whole, we are quite confident of achieving our ROE target of 11.5% as stated in our TWP24 programme last year,” he told a media briefing yesterday.
In terms of operating expenses, the group saw a 5.5% increase y-o-y in FY22 to RM3.7bil, while operating profit before allowances grew by 7.6% y-o-y to RM4.6bil in the same period.
“In the last couple of years, RHB has been focusing on information technology and modernising our systems which has impacted our cost income ratio,” said Mohd Rashid.
He added that spending in these two areas have led to slightly higher costs in 2022.
“Nevertheless, the cost income ratio was actually better than what we have targeted for FY22 to be below or equal to 45%. We came at 44.7 last year. Over the last few years, our focus was to become more efficient in terms of our delivery and operations.
“These strategies will help us to hit our targets as outlined in TWP24. Hence, cost management will also be one of the areas that we will be focusing on in 2023,” said Mohd Rashid.
RHB’s allowances for ECLs reduced by 42.9% y-o-y at RM421.2mil in FY22 due to lower ECLs on loans and securities, as well as higher bad debts recovered. The bank’s credit charge ratio is at 0.15% in FY22 from 0.29% in FY21.
Customer deposits for FY22 was up by 3.9% y-o-y to RM227.2bil, attributable to growth in fixed deposits and current account savings account (CASA) of 6.7% and 1.3% respectively.
CASA composition stood at 29.2% while liquidity coverage ratio remained sound at 162.1% as at Dec 31, 2022.
For FY22, the group’s gross loans and financing grew 6.9% y-o-y to RM212.2bil, mainly supported by growth in mortgage, auto finance, small and medium enterprises, commercial, Singapore and Cambodia.
Domestic loans and financing grew 5.3% y-o-y.
