KUALA LUMPUR (May 29): RHB Bank Bhd's net profit for the first quarter (1Q) ended March 31, 2020 slipped 9.4% year-on-year (y-o-y) to RM570.88 million from RM630.19 million, due mainly to higher allowances for credit losses and lower non-funding income.

In a bourse filing, RHB said revenue for the quarter was RM3.23 billion versus RM3.35 billion previously.

Earnings per share were 14.24 sen against 15.72 sen a year earlier.

In a separate statement, RHB said operating expenses declined by 0.6% to RM841.5 million from a year ago driven by disciplined cost-management efforts in the current volatile market.

It said the cost-to-income ratio improved to 48.2% from 48.6% a year ago.

RHB said allowances for credit losses were at RM151.4 million, primarily due to higher allowances for expected credit losses (ECL) on loans which included a RM50 million additional provision set aside in relation to Covid-19, as well as lower ECL write-back compared with the previous corresponding period for financial investments at amortised cost and financial assets at fair value through other comprehensive income.

Meanwhile, the bank said its gross loans and financing grew by 3.6% y-o-y to RM176.2 billion supported mainly by resilient growth in mortgages, small and medium enterprise (SME) and Singapore loans.

It said domestic loans and financing grew 2.2% y-o-y.

The group's domestic loans' market share stood at 8.8% as at end-March, it said.

RHB said it continued to be prudent in loan-loss provision with loan-loss coverage standing at 107.6% as at end-March.

RHB Banking Group managing director Datuk Khairussaleh Ramli said the group's underlying performance for 1Q reflects its resilience and strong fundamentals despite operating under an extremely tough and unprecedented economic environment.

"We can expect our financial performance to be affected in this financial year. However, we are confident that our healthy liquidity position and strong capital base will help us steer through these challenging times," he said.

Khairussaleh said RHB remains cautious, placing utmost importance in ensuring business continuity and providing  customers with all the support needed during these times.

He said that to-date, the bank has approved almost RM1.3 billion in Special Relief Facility to approximately 2,000 SMEs to help alleviate the short-term cash flow difficulties faced by them arising from the Covid-19 pandemic.

"It is still early days for us to see the full extent of the Covid-19 pandemic implications, with estimates of the possible impact on the group remaining very broad at this point.

"While we stay the course with our five-year strategy, FIT22, we will be reviewing our initiatives with the objective to prioritise key areas taking into account external opportunities and threats as well as internal capability and capacity," he said.

At the midday break today, RHB rose 1.06% or five sen to RM4.79, valuing it at RM19.21 billion.