KUALA LUMPUR (May 27): RHB Bank Bhd's net profit for the first quarter ended March 31, 2019 rose 6.7% year-on-year (y-o-y) to RM630.19 million from RM590.82 million, on the back of lower expected credit losses and operating expenses.

In a filing to the stock exchange today, RHB Bank said revenue for the quarter rose 7.1% y-o-y to RM3.35 billion from RM3.13 billion.

Earnings per share rose to 15.72 sen from 14.73 sen a year earlier.

In a statement in conjunction with its results, RHB Bank said its gross fund based income increased by 8.5% y-o-y on the back of a 5.6% increase in gross loans and financing.

It said funding and interest expense was 18.3% higher mainly due to the full impact of the deposit cost when the overnight policy rate was increased towards the end of January 2018.

"Competition for deposits has remained keen for the year.

"This resulted in net fund based income decreasing by 2.2% to RM1.21 billion with a lower net interest margin (NIM) of 2.16% for the quarter compared with 2.28% a year ago," it said.

The bank said non-fund based income was stable at RM534 million, contributed largely by higher capital market fee income and insurance underwriting surplus.

Meanwhile, RHB Bank said allowances for credit losses were at RM72.9 million, 36.4% lower than the previous year, primarily due to lower allowances for loan impairment and higher write-back in losses for financial securities.

"Annualised credit charge ratio improved to 0.22% compared with 0.26% over the same period last year," it said.

On its outlook, RHB Bank said further adverse developments on the global trade tensions, however, may pose a downside risk to the growth forecast.

It said banking sector loans are expected to grow by mid-single digit, supported by the consumer and business segments.

RHB Bank group managing director Datuk Khairussaleh Ramli said the bank started 2019 with a good set of results as demonstrated by the 6.7% growth in net profit.

"However, the bank said it remains cautious for the rest of the year given the continued challenging operating environment against the backdrop of slowing global economy and ongoing trade tensions.

"We will maintain our focus to uphold our strong fundamentals and prudence in managing the business.

"We will continue to invest in digital capabilities and transform the group's operating model through the AGILE way of working, aimed at fostering innovation, improve customer experience and achieve operational efficiency and productivity," he said.

At the midday break today, RHB Bank shares rose 1.59% or 9 sen to RM5.74, with 623,400 shares traded.