RHB Bank Q1 net profit falls 9.4% to RM570.88m


RHB Bank Bhd’s net profit in the first quarter ended March 31, 2020 fell 9.4% to RM570.88 million from RM630.19 million in the same period last year.

Revenue slipped to RM3.23 billion from RM3.35 billion.

In a filing with Bursa Malaysia today, RHB said the year-on-year (y-o-y) earnings decline was mainly due to higher allowances for credit losses and lower non-funding income, partially offset by higher net funding income and lower operating expenses.

The bank said its net fund based income rose 4.4% to RM1,260.4 million y-o-y, driven by proactive management of funding costs which dropped 7.5% as a result of the increase in current account saving account (CASA) composition and redemption of RM600 million Hybrid Tier- I Capital and RM1 billion sub-debts in 2019.

But this was offset by lower non-fund based income and higher allowances for expected credit losses (ECL), it said.

Non-fund based income was 9.3% lower at RM484.8 million, largely attributed to the lower trading and investment income in line with higher bond yields at the end of the quarter, lower foreign exchange gain and lower capital market fee income, partially offset by an increase in transactional banking fee income and brokerage income, as well as higher insurance underwriting surplus.

The bank’s operating expenses declined by 0.6% to RM841.5 million from a year ago, driven by disciplined cost management efforts in the current volatile market with cost-to-income ratio improving to 48.2% from 48.6% a year ago, it said.

RHB said allowances for credit losses were at RM151.4 million, primarily due to higher allowances for loan impairment and higher allowances written back for financial investments at amortised cost and financial assets at fair value through other comprehensive income in the corresponding year.

It said the total assets of the group remained stable from December 2019 at RM257.8 billion as at March 31, 2020 with net assets per share at RM6.50.

The group’s gross loans and financing also grew by 3.6% y-o-y to RM176.2 billion, supported mainly by resilient growth in mortgages, small and medium enterprises (SMEs) and Singapore loans while domestic loans and financing grew 2.2 per cent year-on-year, it said.

It said the group’s domestic loan market share stood at 8.8% as at end-March 2020.

Customer deposits also increased by 3.8% y-o-y to RM194.0 billion, largely attributable to growth in CASA and money market time deposits but  partially offset by a decrease in fixed deposits, it said.

RHB added that its gross impaired loans remained relatively stable at RM3.5 billion, with gross impaired loans ratio at 2.0%.

On the prospects, RHB said the COVID-19 pandemic has caused a significant disruption to economic activities.

Another challenge facing the industry is the potential effects of low commodities prices, although it is too early to ascertain its full impact on the economy, it said.

“Under the challenging operating environment, we remained cautious, placing utmost importance in ensuring business continuity, attending to urgent customer needs and assisting our staff who may be facing difficulties.

“We will continue to engage with our customers and support them during this difficult period. Our focus on implementing the FIT22 Challenge remains, though we may have to prioritise certain initiatives in light of the pandemic and Movement Control Order (MCO),” it added.