RHB Bank’s group managing director and CEO Mohd Rashid Mohamad.
PETALING JAYA: RHB Bank Bhd says the steady growth of the Malaysian economy could see it post loan growth well above its annual target of 4.5%, while writebacks and lower credit losses could help ensure return on equity (ROE) of above 10% in this financial year (FY24).
With Malaysia’s first half real gross domestic product (GDP) growth coming in at above 5%, RHB Bank’s group managing director and CEO Mohd Rashid Mohamad said the group is set to see sustained loan growth and recovery rates in the second half of this financial year (2H24), backed by improvements in net interest margins as it closes out on its three-year ‘Together We Progress 24’ (TWP24) strategy.
“We are confident the ROE for FY24 will be above 10% on the back of recovery efforts and economic conditions in Malaysia and the region where we operate.
“Loan growth domestically could top our in-house target of 4.5% and hit 6% to 7%, driven by household spending, robust investment activity and strong trade and tourism activities and inflation remaining under control.
The banking group is steadfast in meeting its TWP24 targets through efficiencies and disciplined approach,” he said in an online media briefing yesterday.
He expects the group’s Singapore business to build on its property and healthcare portfolio and contribute to group profits while its operations in Cambodia and Thailand to be more selective in giving out financing and thus, grow at a slower rate than its other regional markets.
For the second quarter ended June 30 (2Q24), RHB posted an income growth of 10.9% year-on-year (y-o-y) to RM4.2bil on higher net fund based and non-fund based income.
Its net fund based income increased 4% y-o-y to RM2.8bil on the back of gross loans and financing growth of 6.4% while non-fund based income rose by 28.5% y-o-y to RM1.4bil owing to higher fee income, net gains on foreign exchange and derivatives, net trading and investment income and one-off gain on disposal of a subsidiary.
Earnings for the quarter, however, fell 10% y-o-y to RM722mil or earning per share (EPS) of 16.7 sen due to higher operating expenses (opex) and expected credit losses (ECL) and the absence of writeback of management overlay seen in 1H23.
Its 1H24 loan growth of 4.9% saw net interest margin strengthened to 1.86% versus 1.82% in FY23 (1.97% vs 1.93% in FY23; inclusive of liability management initiative).
Opex increased 8.1% y-o-y to RM1.9bil mainly from higher personnel, information technology and marketing costs, but its cost-to-income ratio improved to 46.3% from 47.5% in FY23.
Mohd Rashid said the ECL in 2H24 could narrow further from the RM360mil recorded in 1H24 as the ECLs are trending down from RM215mil in 1Q24 to RM145mil in 2Q24.
RHB’s net profit for 1H24 amounted to RM1.45bil or EPS of 33.7 sen, resulting in a ROE of 9.6% versus 9.5% in FY23.
The bank declared an interim dividend of 15 sen a share or payout rate of 45%.
RHB group’s gross loans and financing grew 2.5% year-to-date to RM227.9bil, largely supported by 2.8% growth in group community banking, 10.2% in Singapore and 10.1% in commercial segments.
Customer deposits increased by 4.8% to RM240.3bil at the end of June, mainly due to growth in current account saving account (CASA) by 7% and fixed deposits and money market time deposits by 4%. CASA composition stood at 28.1% as at end June.
Its gross impaired loans was at RM4bil as at end June with gross impaired loans ratio of 1.76%. Mohd Rashid said the group’s focus remains on improving its asset quality through containment of delinquencies and intensifying recovery efforts.
