KUALA LUMPUR (May 23): RHB Bank Bhd, the country's fourth largest bank by assets, saw its net profit fall 11.4% to RM500.28 million or 12.5 sen a share in the first quarter ended March 31, 2017 (1QFY17) from RM564.89 million or 16.3 sen a share a year ago, mainly due to lower total income and higher impairment losses for loans.

Quarterly revenue also slipped 3.4% to RM2.62 billion  from RM2.71 billion in 1QFY16.

In a filing with Bursa Malaysia today, RHB Bank said net fund based income declined 1.2% to RM1.09 billion in 1QFY17 from a year ago, as loans growth and lower funding expenses were offset by margin compression. Net interest margin was 2.17% in 1QFY17 compared with 2.22% in 1QFY16.

Non-fund based income also fell 2.7% to RM462.2 million in 1QFY17, as its fee from loan and loan related exposure and insurance underwriting surplus was lower year-on-year although this was partially offset by an increase in wealth management fee income.

The group added that allowances for impairment on loans and financing rose to RM132.4 million from a year ago, primarily due to additional individual impairment allowances provided on certain corporate accounts that were classified as impaired last year.

In a separate statement today, RHB Bank said retail banking remained the group's biggest contributor in 1QFY17, reporting a pre-tax profit of RM257.5 million, but 12.6% lower from the year-ago period due to lower net fund based income. This was partially offset by lower operating expenses.

Meanwhile, total assets dropped by a marginal 1.3% to RM233.5 billion as at March 31, 2017, while the group's shareholders’ funds increased to RM22.3 billion. Net assets per share improved by 2.6% to RM5.56 as at March 31, 2017.

The group’s gross loans and financing, however, grew 3.2% year-on-year (y-o-y) to RM154.5 billion in 1QFY17. Mortgages and small and medium enterprise financing continued to grow at an annualised growth rate of 13.1% and 6.3% respectively, it added.

RHB Bank also saw its customer deposits rise 5.3% y-o-y to RM165.8 billion, while total current and savings account registered a growth of 14.5% y-o-y. The group’s loan-to-deposit ratio remained healthy at 93.2%.

On prospects, RHB Bank group managing director Datuk Khairussaleh Ramli said it expects to deliver a better performance this year compared with 2016, adding that it is on track to achieve its long-term objectives.

"The group remains cautiously optimistic on the business environment and the development in both domestic and external markets. Notwithstanding this, the group continues to pursue growth responsibly while also effectively managing asset quality and enhancing productivity," he said.

At 3.40pm, RHB Bank shares were down 5 sen or 0.92% at RM5.36, with 141,500 shares done. Its market capitalisation stood at RM21.61 billion.