Banks to see impact of moratorium next year


BANKS are expected to see the full impact of the loan moratorium after December 2021 as borrowers are still enjoying the benefits of it. 

RHB Banking Group MD Datuk Khairussaleh Ramli said the economic impact of the pandemic on borrowers and lenders will become more visible once the moratorium period ends by the end of the year, but he hopes by then economic activities would have resumed and a sense of normalcy returns. 

“The impact is still fairly muted right now because of the assistance still being given, so the impact will be seen later. 

“Having said that, however, a large portion of borrowers have continued to service repayments, including the ones that enjoyed the moratorium,” he said during the bank’s first-half results announcement recently. 

He added that the loan moratorium last year was vastly different to the current one, as the first moratorium was a blanket one, while the current one is optional and relevant individuals and businesses had to apply for it. 

“The impact to banks will be less severe than last year, as our key factor has been to keep close to our customers to understand what they need. Banks have been facilitative in providing assistance, and now there are many schemes to assist borrowers while we have allocated significantly pre-emptive provisioning,” he said. 

According to Khairussaleh, RHB group’s gross loans and financing grew 5.7% year-on-year (YoY) to RM191 billion for the first half of 2021 (1H21), driven mainly by growth in mortgage, auto finance, small and medium enterprises and Singapore. 

Domestic loans and financing made up the bulk at 4.1% growth YoY. In terms of gross impaired loans, Khairussaleh said it stands at RM3.1 billion as of June 30, 2021, with its gross impaired loans ratio of 1.63% lower than the 1.87% seen last year. 

RHB Bank Bhd posted a net profit of RM1.35 billion for the 1H ended June 30, a 39% increase from RM971 million recorded for the same period last year, proving resilience and a strong foundation despite the prolonged Covid-19 pandemic. 

The banking group said excluding net modification loss impact, net profit grew by 5.5% mainly due to higher net fund-based income. 

Net-fund based income rose to RM2.8 billion for the period driven by proactive funding cost management which dropped 33.2% YoY supported by current account and savings account growth of 10.8% 

Its retail banking segment recorded the highest increase in pre-tax profit in the 1H, increasing 15.3% to RM540.9 million a year ago, attributed to a higher net fund-based income and non-fund-based income, and lower allowances for loans and financing, partially offset by higher operating expense (opex). 

The group’s business banking noted a pre-tax profit drop of 21.2% YoY to RM155.7 million for 1H21, due to higher allowances for credit losses on loans and higher opex.

RHB Bank Singapore posted a pre-tax profit of RM18.9 million, driven by higher net fund-based income and non-fund-based income, partially offset by higher expected credit losses on loans and higher opex.

The group’s total assets increased by 4.1% from December 2020 to RM282.3 billion as at June 30. 

Its revenue, however, was lower at RM5.83 billion compared to RM6.47 billion for the corresponding period last year on the back of a drop in the Overnight Policy Rate (OPR). 

Khairussaleh does not expect the OPR to change this year, on expectations that the economy could be on a firmer footing. 

The group declared an interim dividend of 15 sen per share, equivalent to a payout ratio of 45.1%.