KUALA LUMPUR (Nov 27): RHB Bank Bhd's net profit rose 18.4% to RM578.69 million in the third quarter ended Sept 30, 2018 (3QFY18) from RM488.83 million a year ago, on higher net income and lower allowance for credit losses.

This resulted in a higher earnings per share of 14.4 sen for 3QFY18 compared with 12.2 sen for 3QFY17.

Quarterly revenue also increased 8.4% to RM3.2 billion from RM2.96 billion a year ago.

In a filing with Bursa Malaysia today, RHB reported a 6.5% increase in quarterly net income to RM1.69 billion from RM1.58 billion in 3QFY17, while allowance for credit losses shrank to RM82.19 million in 3QFY18 from RM146.84 million a year ago.

The strong quarterly performance lifted the group's net profit for the cumulative nine months (9MFY18) by 16.8% to RM1.74 billion from RM1.49 billion a year ago, while revenue grew 6.7% to RM9.38 billion from RM8.79 billion in 9MFY17.

In a separate statement, RHB attributed the improved net profit to higher net fund based and non-fund based income and lower allowances for credit losses on loans and other assets, partially offset by higher overheads.

Net fund based income increased by 8.9% to RM3.7 billion in 9MFY18 from a year ago.

Gross fund based income increased by 7.1% on the back of a 4% increase in gross loans and financing to RM164.3 billion, while funding and interest expense rose 5.6% year-on-year (y-o-y).

Non-fund based income recorded a 4% y-o-y growth to RM1.4 billion, contributed largely by higher net foreign exchange gain and trading and investment income, partially offset by lower insurance underwriting surplus, brokerage income and capital-market related fee income.

Operating expenses, however, rose 6.4% y-o-y to RM2.5 billion, driven by a rise in personnel costs and information technology-related expenses. Cost-to-income ratio improved to 49% from 49.5% recorded a year ago.

"We continue to be prudent in loan loss provision with loan loss coverage standing at 104.2% as at September 2018," said RHB.

On prospects, RHB said it expects to achieve better performance this year. 

“The group’s performance exhibited resilience despite challenging market conditions and volatility in the global economy. Our robust capital levels, healthy liquidity position and adequate coverage for loan losses set us out for sustainable growth," said RHB group managing director Datuk Khairussaleh Ramli in the statement.

"Our profit for the first nine months this year is our highest ever. We aim to boost performance and enhance our topline growth, as well as deliver service excellence through our FIT22 five-year strategy, supported by our digital transformation programme focusing on providing value-add interactions and customised services based on differentiated segments. To drive this agenda, we scaled up the 'Agile' way of working across the group,” he added.

At 4.13pm, RHB shares were up 2 sen or 0.39% at RM5.21 today, with 1.08 million shares done, bringing a market capitalisation of RM20.77 billion.