KUALA LUMPUR (April 26): RHB Bank Bhd will look to grow more aggressively in the small and medium enterprises (SMEs) space, which is the backbone of the country's economy, and will reduce its exposure in corporates, according to the group's managing director Datuk Khairussaleh Ramli.

"Loan for SMEs will continue to grow as it is the backbone of the economy. The economy will grow better than last year, supported by SMEs, especially those in the manufacturing [sector]. Growth in SMEs will be better than last year. In the first quarter, we have seen SMEs numbers doing better than last year," Khairussaleh told a press conference after the group's annual general meeting today.

He added that besides providing loans to SMEs, RHB will provide the ecosystem to help SMEs to grow their business, such as the financial supply chain, e-retail system and others.

Last year, SMEs consisted about 16% of its entire portfolio, an improvement from 14% when the group first embarked on this segment about two years ago.

"At least in the short term, we will focus on asset quality and making sure that our portfolio is strong. We can grow a lot more in SMEs, especially the smaller ones and we are also looking to reduce a bit of exposure in corporates," he added.

Currently, the group's exposure in retail is about 49% to 50%, while about 30% to 31% is in corporate business with the remaining in SMEs. The long-term target for RHB is to achieve 55%, 25% and 20% in retail, corporate and SMEs respectively.

For 2017, RHB expects to reduce its gross impairment ratio to below 2.5% and cost-to-income ratio to below 50%, an improvement from FY16.

Khairussaleh said the worst is likely to be over but the group will not push for loan growth at the expense of profitability.

All the resolutions put forth by the board of directors were adopted, in particular the approval of a single-tier final dividend of 7 sen per share in respect of the financial year ended Dec 31, 2016, re-election of board of directors and the reappointment of Messrs PricewaterhouseCoopers as auditors of the company.

"In line with the group's commitment to consistently deliver value to our shareholders, a final dividend of 7 sen, amounting to RM280.7 million, has been approved. Together with the interim dividend of 5 sen paid in September 2016, total dividend for 2016 is 12 sen per share, representing a dividend payout ratio of 28.6% out of the group's net profit attributable to shareholders of RM1.68 billion for the financial year 2016.

"Our balance sheet remains strong, as capital and liquidity are at comfortable levels, which puts us in a good position to drive value creation," Khairussaleh said.

At the noon market break, RHB shares edged higher by 0.75% to RM5.35, with about 1.34 million shares traded, giving it a market capitalisation of RM21.5 billion.